CFTC Seeks to Block Arizona's Enforcement Against Kalshi, Argues Sports Prediction Contracts Are Federally Regulated Financial Derivatives

Odaily News The U.S. Commodity Futures Trading Commission (CFTC) and the Department of Justice filed documents in federal court on Tuesday, seeking to prevent Arizona from applying its gambling laws to prediction market operator Kalshi. Federal regulators argue that contracts tied to sporting events, elections, and other real-world events are financial derivatives known as "swaps" and should be regulated federally under the Commodity Exchange Act, rather than being subject to state gambling laws. Arizona had previously filed criminal charges against Kalshi under its state gaming laws, with an arraignment scheduled for April 13. A federal appeals court in New Jersey had previously ruled in favor of Kalshi, determining that its sports contracts are presumed legal under federal law absent CFTC intervention, but courts in other jurisdictions have allowed state-level enforcement actions to proceed. If the court ultimately accepts the CFTC's position, prediction markets could operate nationwide under a unified federal framework.