Kalshi Inc. won a temporary reprieve from criminal prosecution in Arizona when a judge suspended the case at the behest of a federal regulator.
A federal judge on Friday granted a restraining order sought by the Commodity Future Trading Commission after the agency argued that state authorities cannot pre-empt its oversight of prediction markets, the CFTC said in a statement.
Two days earlier, Kalshi failed to persuade a federal judge to halt Arizona’s criminal proceedings against the prediction market provider as the widespread legal battle among states, companies and the Trump-administration-controlled federal agency that governs derivatives trading continues to roil.
“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,” CFTC Chairman Michael S. Selig said in the statement.
Arizona filed a 20-count criminal indictment against Kalshi in March, accusing the company of offering illegal gambling, including allowing betting on Arizona elections.
On Wednesday, US District Judge Michael Liburdi ruled that Arizona could go ahead with its prosecution of Kalshi, saying that US law limits federal interference in state prosecutions.
Friday’s order putting the criminal case on hold was not immediately available online.
Along with Arizona, the commission sued Connecticut and Illinois last week, accusing each of the states of infringing on its authority to regulate contract markets.
The case is KalshiEX LLC v. Johnson, 26-cv-01715, US District Court, District of Arizona (Phoenix).
