Key Takeaways:
A federal judge blocked Kalshi’s Monday arraignment in Arizona, ruling the CFTC is likely to succeed on federal preemption. Arizona filed the first criminal charges against a prediction market operator, with 20 counts, including election and sports wagering. Federal courts are split, with the Third Circuit backing CFTC jurisdiction while Nevada and Massachusetts side with the states. Federal Government Succeeds Where Kalshi Itself FailedHe found that the CFTC had made “a clear showing that it is likely to succeed on the merits of its claim that Arizona’s gambling laws are preempted by the Commodity Exchange Act.” The Arizona Attorney General’s Office said it would inform the court on Monday that it will not proceed with the arraignment while the order stands. The TRO remains in effect through April 24.
The CFTC’s separate motion, backed by the Department of Justice, succeeded by arguing that Arizona’s prosecution directly interfered with the agency’s exclusive federal authority over swaps traded on designated contract markets.
The next step in the Arizona case is a hearing to determine whether the temporary restraining order should be converted into a preliminary injunction that would block the state prosecution for a longer period.
