Judge orders Arizona to pause case against Kalshi

• Kalshi has gained a legal reprieve in Arizona, after a federal judge sided with the platform on Friday
• US District Judge Michael Liburdi previously said he would need more time to debate the merits of the legal arguments, but reached a decision two days later
• States’ pushback against the prediction market’s sports event contract is unlikely to let up any time soon

Kalshi has been slowly gaining ground in its legal battle against multiple states across the country. The United States has seen multiple jurisdictions, among which are Arizona, Connecticut, New Jersey, and Massachusetts, challenge its right to offer sports event contracts.

Arizona ordered to stop its prosecution of Kalshi

After the company secured a favorable ruling at a federal appeals court in its case against New Jersey’s Division of Gaming Enforcement, a federal judge on Friday sided with Kalshi in the case in Arizona.

US District Judge Michael Liburdi first refused to weigh in on Wednesday, arguing that he needed more time to decide and fresh legal arguments, finally saying that Arizona had to pause its criminal case against the platform on Friday.

The case runs on a familiar basis. Arizona’s prosecutors allege that Kalshi is effectively skirting gambling regulation by offering yes/no trades on sporting events. However, this argument was not well met by Judge Liburdi, who argued that the company had sufficiently demonstrated that its products fell within the Commodities Futures Trading Commission’s remit.

Much like the ruling in New Jersey, Judge Liburdi also agreed that sports event contracts could be considered "swaps," which made them eligible for regulation under the CFTC’s mandate and the Commodity Exchange Act.

The CFTC has, in the meantime, also launched a lawsuit against Arizona, alleging that it was trying to reinterpret federal laws and bring them under state laws.

Both sides are willing to push further

Arizona is not likely to let things rest, though, as the Arizona AG’s Office released this statement through a spokesperson: "The attorney general’s office disagrees with the court’s ruling, and we will evaluate our next steps."

At the same time, CFTC Chairman Michael Selig has welcomed the ruling by the court: "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."

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