CFTC Halts Arizona’s Criminal Case Against Kalshi

The Commodity Futures Trading Commission (CFTC) secured a temporary restraining order on Friday, halting Arizona Attorney General Kris Mayes’ criminal prosecution of prediction market Kalshi over allegations of unlicensed gambling.

Federal Intervention Blocks State Prosecution

The CFTC announced Friday that it successfully obtained a temporary restraining order, preventing Arizona from pursuing its criminal case against Kalshi, the prominent prediction market platform led by CEO Tarek Mansour.

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

The CFTC’s Leadership and the Legal Clash

Currently operating as the sole commissioner at the CFTC, Selig assumed the leadership role following his confirmation in December. His solitary status on the commission follows the departure of former acting chairperson Caroline Pham, who left the regulatory agency to join the cryptocurrency firm MoonPay.

The legal battle intensified after Arizona filed charges accusing Kalshi of running an illegal gambling operation without a state license. This federal intervention and subsequent restraining order come just days after a federal judge had initially allowed Arizona’s state-level case to move forward, according to Bloomberg.

A Broader Battle Against State-Level Overreach

Arizona is not the only state facing pushback from federal regulators over its stance on prediction markets. The CFTC has also launched similar legal actions to block state-level prosecutions from proceeding against Kalshi in Connecticut and Illinois.