Kalshi wins reprieve from Arizona criminal case at CFTC’s urging

Kalshi Inc. was temporarily suspended from criminal prosecution in Arizona after a judge put the case on hold following an order from a federal regulator.

The CFTC said in a statement that a federal judge on Friday granted a restraining order requested by the Commodity Futures Trading Commission after the agency argued it could not block government officials’ oversight of prediction markets.

Two days ago, Kalshi failed to convince a federal judge to halt a criminal investigation he launched against Arizona’s prediction market provider as the widespread legal battle between states, companies and the Trump administration-controlled federal agency that oversees derivatives trading continues to escalate.

“Arizona’s decision to weaponize state criminal law against companies that comply with federal law sets a dangerous precedent, and today’s decision by the court sends a clear message that intimidation is not an acceptable tactic for circumventing federal law,” CFTC Chairman Michael S. Selig said in a statement.

Arizona filed a 20-count criminal complaint against Kalshi in March, accusing the company of offering illegal gambling, including allowing betting on Arizona elections.

On Wednesday, U.S. District Judge Michael Liburdi ruled that Arizona could continue its investigation into Kalshi, saying U.S. law limits federal intervention in state investigations.

Friday’s order suspending the criminal case was not immediately available online.

In addition to Arizona, the commission also sued Connecticut and Illinois last week, accusing each of the states of violating its authority to regulate contract markets.

The case is KalshiEX LLC v. Johnson, 26-cv-01715, U.S. District Court, District of Arizona (Phoenix).