Federal court blocks Arizona crackdown on Kalshi’s event contracts

A federal judge in Arizona has temporarily barred state officials from enforcing gambling laws against Kalshi, siding with the CFTC.

A federal judge in Arizona has temporarily barred state officials from enforcing gambling laws against Kalshi, siding with US regulators in a growing dispute over how event-based trading products should be classified.

In an order issued on Friday, Judge Michael Liburdi of the US District Court for the District of Arizona granted a request from the Commodity Futures Trading Commission (CFTC) and the federal government to halt any state-level action targeting contracts listed on CFTC-regulated markets .

The ruling centers on whether Kalshi’s “event contracts” fall under federal derivatives law or state gambling statutes. Last month, Arizona authorities sought to pursue enforcement against Kalshi under local gambling rules, but the CFTC asked a court order on Wednesday to stop the action.

The court said that the CFTC is likely to succeed in arguing that such contracts qualify as “swaps” under the Commodity Exchange Act, placing them within federal jurisdiction. The law grants the agency exclusive authority over swaps traded on designated contract markets.

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As part of the decision, Arizona officials are temporarily prohibited from initiating or continuing civil or criminal enforcement tied to Kalshi’s event contracts on regulated exchanges .

The restraining order will remain in effect until April 24, while the court considers whether to issue a longer-term preliminary injunction.

The case adds to a broader debate over prediction markets in the United States, particularly as regulators and states clash over whether such products resemble financial instruments or online betting. Last month, Utah lawmakers also passed a bill targeting Kalshi and Polymarket that classifies proposition-style bets on in-game events as gambling, aiming to block such offerings in the state.

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Last week, a Nevada judge extended a ban preventing Kalshi from offering event-based contracts in the state, siding with regulators who argue the products amount to unlicensed gambling.

The court found that the platform’s offerings closely resemble traditional sports betting. The judge said there is no meaningful distinction between placing a wager through a sportsbook and buying a contract tied to an event outcome, concluding that such activity falls under Nevada’s gaming laws.

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Source: CoinTelegraph