Arizona prosecution of online prediction markets blocked by federal judge
Updated
Updated · Arizona Daily Star · May 6
Arizona prosecution of online prediction markets blocked by federal judge
3 articles · Updated · Arizona Daily Star · May 6
Judge Michael Liburdi ruled in Phoenix that federal CFTC authority over “swaps” bars Arizona from pursuing 20 criminal charges against Kalshi, while Polymarket and similar sites remain accessible in the state.
He said Congress created a comprehensive federal regime for designated contract markets, pre-empting Arizona laws on election betting, licensed sports wagering and other games of chance.
Attorney General Kris Mayes is reviewing the decision and could appeal, while a separate Ninth Circuit case involving Kalshi and Nevada could still affect the legal landscape.
As states and feds clash, who will ultimately control the billion-dollar prediction market industry?
Are prediction markets the future of finance or just a new frontier for unregulated gambling?
Arizona vs. Kalshi: Federal Court Upholds Commodity Exchange Act, Halts State Gambling Enforcement
Overview
In April 2026, Federal Judge Michael Liburdi issued a permanent injunction blocking Arizona from prosecuting Kalshi under state gambling laws, following a grand jury indictment by Arizona's Attorney General. The court classified Kalshi's event contracts as federally regulated swaps under the Commodity Exchange Act, applying federal preemption to override state gambling claims. This ruling, supported by a similar decision from the Third Circuit, triggered ongoing legal battles as the CFTC sued multiple states defending its exclusive jurisdiction. States raised concerns about underage access and gambling risks, prompting legislative proposals and leading prediction market platforms to adopt stronger consumer protections. Arizona plans to appeal, signaling continued conflict over the regulation of prediction markets.