Federal Judge Blocks Arizona from Bringing Criminal Charges Against Prediction Market Provider Kalshi

A federal judge has intervened in the legal battle between the state of Arizona and prediction market provider Kalshi, blocking Arizona from pursuing criminal charges against the company. The decision, issued by District Judge Michael Liburdi in the District of Arizona, came in response to a motion filed by the Commodity Futures Trading Commission (CFTC).

The ruling prevents Arizona from moving forward with its plan to bring 20 criminal charges against Kalshi for allegedly offering betting products that violate state law. The judge’s temporary restraining order prohibits Arizona from enforcing its gambling laws against contracts listed on CFTC-regulated designated contract markets.

CFTC Chair Michael Selig expressed appreciation for the judge’s decision, criticizing Arizona’s attempt to use state criminal law against companies that comply with federal regulations. Selig emphasized the importance of upholding federal law and preventing states from circumventing it through intimidation tactics.

The legal dispute centers on the classification of prediction markets, also known as event contracts, as swaps subject to CFTC oversight. While state courts have often sided with states in similar cases, federal courts have delivered mixed verdicts. The Third Circuit Court of Appeals recently ruled in favor of CFTC regulation of prediction markets, while the Ninth Circuit Court of Appeals declined to intervene in the ongoing case in Nevada.

Judge Liburdi’s decision to block Arizona’s criminal charges against Kalshi follows a previous ruling denying Kalshi’s motion for a preliminary injunction against the state. The legal battle highlights the complex regulatory landscape surrounding prediction markets and the ongoing debate over federal versus state jurisdiction in this area.

As the case continues to unfold, stakeholders in the prediction market industry will be closely monitoring developments in both federal and state courts. The outcome of this legal battle could have far-reaching implications for the future of prediction markets and the regulatory framework that governs them.

UPDATE (April 11, 2026, 01:16 UTC): Adds context.