In response to a motion filed by the Commodity Futures Trading Commission, a federal judge has temporarily blocked Arizona's attempt to bring criminal charges against Kalshi, a prediction market provider. The ruling, made by District Judge Michael Liburdi of the District of Arizona, prevents the state from proceeding with an arraignment that was scheduled for Monday, April 13. Arizona had previously announced plans to file 20 criminal charges against Kalshi, alleging that the company had violated state law by offering betting products. However, Judge Liburdi found that the CFTC is likely to succeed in its claim that Arizona's gambling laws are preempted by federal law, specifically the Commodity Exchange Act.
As a result, the judge granted a temporary restraining order, which will remain in effect for two weeks, and also noted that a pending motion for a preliminary injunction could potentially extend this order. The CFTC has welcomed the judge's decision, with Chair Michael Selig stating that Arizona's actions set a 'dangerous precedent' and that the court's order sends a clear message that intimidation is not an acceptable way to circumvent federal law. The case is part of a broader dispute over the regulation of prediction markets, with the CFTC arguing that these markets are subject to federal supervision and state laws are therefore preempted. The issue has seen mixed results in court, with some state courts siding with states and others ruling in favor of the CFTC.
The Ninth Circuit Court of Appeals is set to hold a hearing on a consolidated case next week, which will allow various providers and parties to present their arguments.