Court Grants CFTC a Restraining Order Against Arizona’s DOJ

Prediction market operators in the Copper State can breathe a little easier, at least for now. 

A District Court has granted a temporary restraining order for the Commodity Futures Trading Commission (CFTC) against Arizona’s Department of Justice. The ruling ends the state's ability to pursue criminal charges against operators like Kalshi, which the state had recently filed. The federal regulator currently has sole authority to manage the prediction industry.

The ruling came down the night before the criminal case was set to begin, and the case was canceled as a result.

“The CFTC appreciates the court’s careful consideration of these important legal questions and the court’s decision to preserve the status quo,” CFTC chairman Michael Selig shared in a statement. “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.”

Arizona’s Attorney General had been pursuing criminal charges against Kalshi, claiming the operator is knowingly offering gambling without joining Arizona’s legal sports betting market. It was the first time any state had threatened to take a prediction operator to criminal court, elevating the ongoing fight over the new industry’s legal status. 

The win not only protects Kalshi, but also the other prediction operators with platforms in Arizona. 

The ruling is expected to be appealed as Arizona looks to continue its criminal case.

CFTC Support Already Paying Off for Predictions

When Kalshi was first leading the prediction industry into the mainstream, the CFTC was largely leaderless. Several chairs had been left vacant, and the President’s original nominee to head the department was withdrawn amid concerns about his ties to Kalshi.

Before Selig eventually took over, the federal regulator was not supportive of the prediction industry. While they wouldn’t enforce bans, they did issue advisory notes indicating that the CFTC’s interim leadership was wary of prediction markets. This left operators without legal support, but that changed once Selig took office.

After insisting that he would allow the courts to decide on sports prediction markets, Selig immediately used the CFTC to openly support them. That has included strong statements, as well as several lawsuits filed against states looking to push the industry out. 

The change in leadership at the CFTC has brought an end to the legal momentum that states had against prediction operators. With no one expecting Selig to go against the White House on anything, it appears the industry will remain safe as long as the current administration remains in power.