CFTC Win Pauses Arizona Case Against Kalshi, Sets Stage for Ninth Circuit Appeal

US district choose Michael Liburdi indicated on Friday that he would grant the Commodity Futures Trading Commission’s request for a short-term restraining order (TRO) stopping Arizona from pursuing legal costs in opposition to Kalshi. Arizona Attorney General Kris Mayes had charged Kalshi with a number of violations of the state’s playing legal guidelines.

The precise phrases of the restraining order, together with its potential expiration date, are nonetheless pending Liburdi’s issuance of the doc. Mayes can have enchantment choices when the order drops, however extenuating circumstances may make it preferential for Mayes to just accept the courtroom’s determination for the time being.

Temporary Restraining Order Blocks Arizona Criminal Enforcement Proceedings on Prediction Markets: https://t.co/KDsT63kpbd

— CFTC (@CFTC) April 10, 2026

Liburdi commits to restraining Arizona’s legal case in opposition to Kalshi

Liburdi said after Friday’s listening to within the Commodity Futures Trading Commission’s (CFTC) lawsuit in opposition to Arizona that he “will enter a brief restraining order,” in accordance with Jack Newsham of Business Insider. Newsham additional reported that representatives for the state will ask the state courtroom to pause their legal proceedings in opposition to Kalshi on Monday consequently.

As of the time of this writing, Liburdi had not but issued the TRO. However, it’s the primary victory for the trio of lawsuits that the CFTC initiated against Arizona, Connecticut, and Illinois in early April. In all three of these actions, the CFTC named state officers as defendants and argued that their makes an attempt to limit the operation of CFTC-registered prediction market exchanges infringed upon the CFTC’s sole regulatory powers over designated contract markets (DCMs).

Mayes filed the charges against Kalshi a few weeks prior. Arizona was the primary to take the step of bringing legal costs in opposition to a DCM trade like Kalshi, making an attempt to ascertain that Kalshi’s contracts represented unlicensed sports activities wagering and violated the state’s legal guidelines in opposition to betting on election outcomes.

As lengthy because the TRO is in impact, prosecutors in Arizona seemingly received’t be capable to proceed in pursuing these costs. That is, in fact, except Mayes is ready to efficiently enchantment the order.

Yet one other potential enchantment to the Ninth Circuit

The appellate courtroom for the federal district of Arizona is the Ninth Circuit, which has already declined to intervene in a dispute between Kalshi and Nevada. The TRO represents one other potential plea to the Ninth, although.

In March, the Ninth rejected a request from Kalshi to remain a TRO from a Nevada state courtroom banning most types of DCMs buying and selling throughout the state’s borders. Mayes may ask the Ninth to overturn the TRO in opposition to his workplace pursuing legal costs.

If Liburdi’s TRO stays in impact for the length of the CFTC’s case in opposition to Arizona, overturning it on enchantment to the Ninth Circuit may very well be difficult. The state would want to reveal that maintaining the TRO in place causes irreparable hurt to its pursuits or residents, and that permitting its legal case to proceed in state courtroom whereas the federal dispute unfolds would mitigate that hurt.

If Mayes declines to ask the Ninth Circuit to overturn the TRO, it might not imply Arizona is abandoning its legal case in opposition to Kalshi. A victory in opposition to the CFTC on the federal district courtroom degree would as a substitute present a powerful endorsement of pursuing these costs.

That trial could be one other path to an enchantment to the Ninth. Combined with the dispute in Nevada plus litigation in Washington, each Washington’s state case against Kalshi and Robinhood’s federal case against Washington, it appears inevitable that the Ninth shall be requested to weigh in on the matter of federalism throughout the scope of prediction markets once more.

The content material of Liburdi’s forthcoming TRO may make such a request much less or extra imminent.

Scope of Liburdi’s order may sign enchantment possibilities

Arizona’s legal costs didn’t pertain to all Kalshi DCMs. Rather, the allegations centered on contracts associated to election outcomes and sporting occasions.

However, in its petition to the court, the CFTC argued that any try by Arizona to limit DCMs represents usurpation of its “unique jurisdiction” over exchanges. The grievance to the federal district courtroom from the CFTC additionally argues that present federal legislation explicitly preempts any state statutes pertaining to DCMs.

Thus, the breadth of Liburdi’s TRO shall be necessary. A broad order restraining Arizona from taking any enforcement motion in opposition to any prediction markets in any way and a narrower order pausing the state’s present legal proceedings in opposition to Kalshi are two materially completely different rulings.

The latter probably leaves Arizona room to change its method so long as it swings away from what Liburdi has restrained. The former is extra detrimental to Arizona’s curiosity in establishing sovereignty over exchanges however may additionally turn out to be enchantment fodder.

It’s doable that Arizona may argue that CFTC laws governing DCMs are incomplete or that the CFTC’s enforcement of the foundations is missing. For that motive, Mayes may suggest Arizona is just stepping in to fill the hole in accordance with its personal legal guidelines.

Mayes and different Arizona officers are more likely to contemplate their choices after the complete textual content of Liburdi’s order is out there to scrutinize. The established order outlined in Liburdi’s feedback signifies that buying and selling occasion contracts on DCMs like Kalshi can proceed uninterrupted for customers in Arizona, at the least for the time being.

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