Federal Judge Blocks Arizona Crackdown on Kalshi Election Bets
A federal judge permanently blocked Arizona from prosecuting Kalshi over its election wagering operations.
Why it matters: The ruling underscores federal supremacy in regulating digital prediction markets, limiting states’ ability to target federally regulated platforms. It sets a significant precedent for compliance and litigation strategies across digital wagering and broader prediction markets.
- Judge Michael Liburdi issued a permanent injunction on May 5, 2026, halting Arizona's prosecution of Kalshi.
- The court found the Commodity Exchange Act gives exclusive authority to the CFTC, preempting Arizona gambling laws.
- Arizona AG had filed 20 misdemeanor charges accusing Kalshi of operating an unlicensed betting business and accepting election wagers.
- The CFTC sued Arizona, arguing the state overstepped by infringing on its exclusive regulatory authority.
On May 5, 2026, U.S. District Judge Michael Liburdi issued a permanent injunction preventing Arizona from prosecuting Kalshi for allegedly violating state gambling statutes. The decision halts a high-profile state challenge to Kalshi, which lets users speculate on election outcomes through its federally regulated contract market.
Judge Liburdi determined that the Commodity Exchange Act preempts Arizona law in this context, and that the Commodity Futures Trading Commission (CFTC) holds exclusive authority to regulate Kalshi’s operations. As the court wrote: “Every time Congress has revisited the federal-state allocation of authority in this area, it has chosen to expand federal control.”
- Kalshi operates as a federally regulated designated contract market, authorized to allow trades on diverse real-world events, including elections.
- Arizona Attorney General Kris Mayes had filed 20 misdemeanor charges against Kalshi, alleging the company ran an illegal wagering business and accepted forbidden bets on elections under state law (NPR).
- The CFTC responded with a federal lawsuit, challenging Arizona’s right to prosecute a market under its direct oversight, and arguing such state action undermined national swaps market regulation (AZ Mirror).
Richie Taylor, spokesperson for the Arizona Attorney General’s Office, stated, “The attorney general’s office disagrees with the court’s ruling and we will evaluate our next steps.”
Michael Selig, Chairman of the CFTC, emphasized the broader stakes: “Arizona’s decision to weaponize state criminal law against companies that comply with federal law sets a dangerous precedent.”
By the numbers:
- 20 — misdemeanor charges filed by Arizona AG against Kalshi
- 1 — designated federal contract market status under the Commodity Exchange Act
Yes, but: Arizona's Attorney General may pursue further legal action, as officials are reviewing the decision.