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Judge blocks Arizona from applying gambling laws to Kalshi
Judge Michael Liburdi has blocked Arizona from imposing gambling laws on prediction market platforms, stressing that event contracts are classified as federally regulated products.
The case first started when Arizona tried to prosecute Kalshi for operating in the state without a license, but the court ruled in favor of the CFTC and stated that Congress gave exclusive rights over event contracts to the federal government.
During the process, Arizona had even gone as far as to file 20 criminal counts against Kalshi, which led to the CFTC and the DOJ launching a lawsuit against the state of Arizona for trying to enforce gambling laws on federally regulated DCMs.
The court had initially granted a temporary restraining order and has now updated it to a full preliminary injunction.
Judge Liburdi commented:
“If states could prosecute DCM operators for offering event contracts, the operators would face the prospect of 50 different regulators, each capable of restricting which contracts may be listed on each exchange. The result would be the inconsistent regulatory patchwork that Congress intended to avoid.”
The judge additionally found three reasons for preemption, including field preemption, conflict preemption, and impossibility preemption.
There’s speculation that Arizona Attorney General Kris Mayes aims to appeal the decision; however, state citizens will be allowed to trade on prediction market platforms according to the current ruling.
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