U.S. District Judge Michael Liburdi in Arizona issued a Temporary Restraining Order on April 10, 2026, preventing the state from moving forward with a 20-count criminal case against KalshiEX LLC. The order runs through April 24 while the CFTC pursues a preliminary injunction that could extend the block beyond that date. An arraignment that had been scheduled for April 13 will not proceed.

The CFTC, joined by the U.S. Department of Justice, sought the order after Arizona Attorney General Kris Mayes filed what amounted to the first-ever criminal prosecution of a CFTC-registered prediction market operator in U.S. history. Mayes filed the charges in Maricopa County Superior Court on March 17, accusing Kalshi of running an illegal wagering business and placing four counts specifically related to election betting on 2026 and 2028 races. Potential fines under Arizona law reached $20,000 per sports wager and $10,000 per election contract.

Judge Liburdi found the CFTC had demonstrated "a clear showing that it is likely to succeed on the merits" of its core argument: that the Commodity Exchange Act preempts state gambling statutes when the contracts in question are traded on a CFTC-designated contract market. The order restrains Arizona from enforcing its gambling laws "in any criminal or civil enforcement actions to any contracts listed on CFTC-regulated designated contract markets." CFTC Chairman Michael Selig framed Arizona's move as a threat to the federal regulatory system. "Arizona's decision to weaponize state criminal law against companies that comply with federal law sets a dangerous precedent," he said in a statement. Kalshi's attorney Robert Denault put it more simply, saying that "federal law is supreme" under the U.S. Constitution.

Not everyone sees the CFTC's posture as straightforward law enforcement. That posture also marks a notable reversal: the CFTC itself repeatedly blocked Kalshi's election contracts from 2022 through 2024, only changing course under the Trump-era commission, which now acts as Kalshi's most aggressive legal defender. Todd Phillips, a professor at Georgia State University, told NPR the agency's aggressive legal stance amounts to "trying to put a thumb on the scale for prediction markets," suggesting the intervention reflects a political choice rather than neutral regulatory action.

The Broader Fight

Arizona is not alone. The CFTC filed suits against Arizona, Illinois, and Connecticut on April 2, arguing those states are interfering with federally regulated financial markets. Roughly 20 federal and state actions are now underway spanning at least 14 states involved in some form of dispute with prediction market operators. Connecticut issued cease-and-desist orders to Kalshi, Robinhood, and Crypto.com, while Illinois sent similar letters to Kalshi, Polymarket, Crypto.com, and Robinhood between April 2025 and January 2026. The scale of state-level resistance was further underscored when more than 34 states filed opposing amicus briefs in the Third Circuit case.

The legal picture is complicated by a circuit split. On April 6, the U.S. Court of Appeals for the Third Circuit ruled in a New Jersey case that Kalshi's sports event contracts qualify as "swaps" under the Commodity Exchange Act, affirming federal preemption. The Ninth Circuit, however, reached the opposite conclusion and allowed Nevada to maintain its restrictions. Four federal circuits are involved in total, with the Third and Ninth having already issued conflicting rulings and the Fourth and Sixth currently hearing related cases. Legal analysts at Holland & Knight, a law firm with clients active in this space, put the probability of Supreme Court review by the end of 2026 at roughly 64 percent; readers should weigh that estimate against the firm's potential interest in the outcome.

Founded in 2018 and designated as a CFTC contract market in November 2020, Kalshi has grown substantially during this period of legal uncertainty. The platform recorded $23.8 billion in nominal trading volume in 2025, a 1,108 percent increase year on year, and processed 97 million transactions, up 1,680 percent from 2024. In February 2026 alone, monthly volume hit a record $9.8 billion. Sports contracts account for roughly 85 to 90 percent of volume and about 89 percent of revenue. Those figures illustrate how quickly the platform has scaled even as courts continued to contest the legal foundations beneath it. Across the broader prediction market sector, total 2025 volume reached $50.25 billion, with Kalshi and decentralized rival Polymarket together holding over 97.5 percent market share.

What It Means Beyond U.S. Borders

The jurisdictional fight carries real implications for markets far outside the United States. The central question in every courtroom, whether an event contract is a financial derivative or a bet, is one that regulators across South Asia and Africa will face as prediction market infrastructure becomes more widely accessible.

In South Asia, informal prediction markets on cricket and commodity outcomes already exist in India and Bangladesh, and Sri Lanka is actively debating formal event derivatives frameworks. The Securities and Exchange Board of India (SEBI) and successor bodies to the Forward Markets Commission have long grappled with how to classify and govern such instruments. A U.S. Supreme Court ruling affirming the CFTC's position would provide a legal template that regional regulators could reference directly.

In Africa, the stakes are also rising. Sub-Saharan Africa recorded more than $205 billion in on-chain value between July 2024 and June 2025, a 52 percent year-on-year increase. South Africa is simultaneously moving crypto assets into its exchange control regime under the Currency and Exchanges Act, creating a tension between national frameworks and sub-national or provincial enforcement that mirrors what U.S. courts are now adjudicating. For developers in Kenya or Nigeria building crop insurance products or electoral hedging tools on blockchain rails, the outcome of Kalshi's case is more than a distant headline.

Centralized platforms like Kalshi remain largely inaccessible to retail participants in those regions due to geographic KYC restrictions. Decentralized alternatives like Polymarket, which runs on the Polygon network, carry fewer access barriers but less regulatory protection. The CFTC's early procedural win in Arizona, even a temporary one, keeps that gap in place while the courts work through a question that no jurisdiction has fully answered yet.