The U.S. Department of Justice (DOJ) and the Commodity Futures Trading Commission (CFTC) have requested a federal court to block Arizona from enforcing state gambling laws against Kalshi's event contracts. The agencies argue these contracts are swaps and fall under the CFTC's exclusive authority.
In a Wednesday filing, the DOJ and CFTC contended that Arizona's legal actions unlawfully intrude upon the CFTC's exclusive jurisdiction over federally regulated event-contract markets. The filing states that event contracts listed on platforms like Kalshi are considered swaps under the Commodity Exchange Act.
If the court grants the request, Arizona would be prevented from applying its gambling laws to prediction markets registered as federally regulated event contracts. An arraignment in the criminal case against Kalshi is currently set for April 13.
Arizona Attorney General Kris Mayes announced charges against Kalshi on March 17, alleging the company operated an unlicensed illegal gambling business and offered illegal election wagering.
This dispute represents a significant test of whether prediction market contracts are governed by federal commodities law or state betting regulations. The CFTC has separately sued gaming regulators in Illinois, Connecticut, and Arizona, asserting its exclusive jurisdiction over these types of contracts.