The Commodity Futures Trading Commission and Department of Justice have asked a federal court to block Arizona’s indictment of prediction market Kalshi on criminal charges for offering sports gambling without a license.
The agency’s move comes days after a New Jersey federal appellate court decision forbidding the state from pressing civil charges against Kalshi after finding that the CFTC has exclusive jurisdiction over prediction market activity on federally regulated exchanges.
“Arizona’s decision to weaponize preempted state criminal law against companies that comply with a comprehensive federal regime sets a dangerous precedent,” said CFTC Chairman Michael Selig, in a statement. “The CFTC is committed to vigorously defending its exclusive authority over prediction markets. We are asking the court to send a clear message that intimidation is not an acceptable tactic to circumvent federal law.”
Arizona is just one of a number of states that have sued to prevent prediction markets like Kalshi and Polymarket from offering what they say is clearly sports betting that is regulated at the state level. The prediction markets have argued that the CFTC has exclusive jurisdiction.
On March 17, Arizona Attorney General Kris Mayes filed 20 criminal charges against the companies behind Kalshi, arguing that the company is “operating an illegal gambling business in Arizona without a license” and that it allowed betting on state elections, which is separately illegal.
Kalshi had preemptively sued Arizona to prevent it from filing charges five days earlier.
The company has had mixed results in court, with an Ohio federal district court denying Kalshi’s request for a preliminary injunction against civil charges filed by that state. A Tennessee court, however, ruled against the state gaming authorities.
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