The Commodity Futures Trading Commission on Wednesday filed a motion in the US District Court for the District of Arizona seeking a preliminary injunction and temporary restraining order to stop the state from applying criminal and gambling laws against CFTC-regulated prediction markets.
The motion follows last week’s joint lawsuit with the Department of Justice challenging Arizona’s conduct as preempted by federal law. Arizona is the only state among those targeted to have pursued criminal charges, filing a 20-count misdemeanor case against prediction market platform Kalshi in March.
The CFTC says the Commodity Exchange Act gives it exclusive jurisdiction over event contracts and preempts state laws that attempt to regulate them. Arizona alleges that prediction market products amount to illegal gambling and election betting under state law.
The dispute is over who gets to police these products: the CFTC as derivatives contracts, or states as gambling activity.
“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 S. Selig. “We are asking the court to send a clear message that intimidation is not an acceptable tactic to circumvent federal law.”
Three states, one federal challenge
If granted, the motion would pause Arizona’s enforcement while the broader jurisdictional case proceeds.
The CFTC has also filed complaints against Connecticut and Illinois, both of which sent cease-and-desist letters to CFTC-regulated entities. Arizona drew the emergency motion because it escalated from administrative pressure to criminal prosecution.
The filing lands days after the Third Circuit handed Kalshi a win against New Jersey, ruling that state gaming regulators could not prevent the platform from offering sports-related event contracts.
