A federal judge in Arizona has temporarily blocked state officials from enforcing gambling laws against Kalshi, backing U.S. regulators in an ongoing dispute over how event-based trading products should be classified.
In a ruling issued Friday, Judge Michael Liburdi of the U.S. District Court for the District of Arizona approved a request from the Commodity Futures Trading Commission (CFTC) and the federal government to pause any state-level enforcement targeting contracts listed on CFTC-regulated markets.
At the heart of the case is whether Kalshi’s “event contracts” should be treated as federally regulated derivatives or as gambling under state law. Arizona authorities had moved last month to take action under local gambling rules, prompting the CFTC to seek a court order earlier this week to halt the effort.
The court indicated that the CFTC is likely to prevail in arguing that the contracts qualify as “swaps” under the Commodity Exchange Act, which would place them firmly under federal oversight. The law grants the agency exclusive jurisdiction over swaps traded on designated contract markets.
Court pauses Arizona enforcement
As part of the decision, Arizona officials are temporarily barred from initiating or continuing any civil or criminal proceedings related to Kalshi’s event contracts on regulated exchanges.
The restraining order will remain in place until April 24, as the court considers whether to extend the block through a preliminary injunction.
The case adds to a wider debate in the United States over prediction markets, as regulators and state authorities clash on whether these products should be treated as financial instruments or forms of online betting. Last month, lawmakers in Utah passed legislation targeting platforms like Kalshi and Polymarket, classifying proposition-style bets on in-game events as gambling in an effort to restrict such offerings within the state.
Nevada judge extends Kalshi ban
In a separate development last week, a Nevada judge extended a ban blocking Kalshi from offering event-based contracts in the state, siding with regulators who contend that the products constitute unlicensed gambling.
The court determined that Kalshi’s offerings closely mirror traditional sports betting, noting there is little meaningful difference between placing a wager through a sportsbook and purchasing a contract tied to an event outcome. As a result, the activity was deemed to fall under Nevada’s gaming laws.
