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The US Department of Justice (DOJ) and Commodity and Futures Trading Commission (CFTC) asked a federal court to block Arizona from enforcing state gambling law against Kalshi’s event contracts, arguing that they fall under the CFTC’s exclusive authority over swaps markets.
The Wednesday <a href="https://storage.courtlistener.com/recap/gov.uscourts.azd.1483385/gov.uscourts.azd.1483385.49.0.pdf" rel="noopener noreferrer nofollow">filing</a> argues that event contracts listed on federally regulated platforms such as Kalshi are swaps under the Commodity Exchange Act and therefore fall within the CFTC’s exclusive jurisdiction.
The filing says Arizona’s enforcement effort unlawfully intrudes on the CFTC’s exclusive jurisdiction over federally regulated event-contract markets.
If granted, the order would block Arizona from applying its gambling laws to prediction markets that are listed as federally regulated event contracts. An arraignment in the criminal case against Kalshi is currently scheduled for Monday.
Arizona Attorney General Kris Mayes <a href="https://cointelegraph.com/news/arizona-criminal-charges-kalshi-gambling" rel="noopener noreferrer nofollow">announced charges against the companies</a> behind Kalshi on March 17, accusing them of operating an “illegal gambling business in Arizona without a license” and offering illegal election wagering.
Kalshi co-founder and CEO, Tarek Mansour, <a href="https://cointelegraph.com/news/kalshi-ceo-arizona-criminal-charges-total-overstep" rel="noopener noreferrer nofollow">claimed the charges</a> were a “total overstep” and “not about gambling.”
<h2 id="federal-and-state-regulators-clash-over-prediction-markets">Federal and state regulators clash over prediction markets</h2>
The dispute has become a major test of whether prediction market contracts belong under federal commodities law or state betting rules.
<figure><img src="https://s3.cointelegraph.com/uploads/2026-04/019d7247-ef4c-74c7-882f-40216961a00d.png" alt="DOJ and CFTC seek halt to Arizona action against Kalshi">
 <figcaption>CFTC, DOJ court filing seeking a TRO against Arizona federal court in case against Kalshi, Case No: CV-26-01715-PHX-MTL. Source: Courtlistener
 </figcaption>
</figure>
On April 2, the <a href="https://cointelegraph.com/news/cftc-sues-3-states-prediction-market-regulation" rel="noopener noreferrer nofollow">CFTC filed three separate lawsuits</a> against the gaming regulators of Illinois, Connecticut and Arizona, arguing that those states could not apply their gambling laws and licensing requirements to event contracts listed on CFTC-regulated platforms.
In those suits, the CFTC says it has exclusive jurisdiction over CFTC-registered designated contract markets that list lawful event contracts. Kalshi is the clearest example in the current litigation.
Related: <a href="https://cointelegraph.com/news/prediction-markets-trading-block-nevada-court-ruling" rel="noopener noreferrer nofollow">Kalshi, Polymarket face trading halt in Nevada after court rulings</a>
Prediction markets are facing growing regulatory pressure in the US, where <a href="https://cointelegraph.com/features/federal-regulation-looms-states-prediction-markets" rel="noopener noreferrer nofollow">11 states have pursued legal action</a> against them.
Prediction market activity has been rising since the beginning of the US and Israeli military conflict with Iran, fueling renewed insider trading allegations, after six Polymarket <a href="https://cointelegraph.com/news/polymarket-traders-1m-us-iran-strike-insider-trading-concerns" rel="noopener noreferrer nofollow">traders netted $1 million</a> by accurately betting when the US would strike Iran.
In response to insider trading concerns, <a href="https://cointelegraph.com/news/us-senate-bill-targets-prediction-markets-on-war-and-assassinations" rel="noopener noreferrer nofollow">Democratic Party Senator Adam</a> Schiff has introduced legislation seeking to ban prediction markets on war, death and terrorism.
Magazine: <a href="https://cointelegraph-magazine.com/baby-degen-ai-agent-can-trade-crypto-for-you-24-7-but-theres-a-catch/" rel="noopener noreferrer nofollow">Train AI agents to make better predictions… for token rewards</a>

DOJ and CFTC seek halt to Arizona action against Kalshi

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