US District Judge Allows Arizona to Press Criminal Charges Against Kalshi

In a ruling on Wednesday, US District Judge Michael Liburdi rejected a request by prediction market operator Kalshi to prevent Arizona prosecutors from proceeding with a criminal case. Judge Liburdi also declined Kalshi’s request for a determination that federal law overrides Arizona’s gambling laws.

Judge Liburdi Denies Kalshi’s Request

Arizona Attorney General Kris Mayes’s Office has filed 20 misdemeanor wagering charges against Kalshi, alleging the company took bets on political outcomes, college sports, and individual player performance. Arizona accuses Kalshi of operating an unlicensed wagering business and placing bets on elections. The case opens a new chapter in a high-stakes legal fight over whether prediction markets should be regulated under the same framework as traditional gambling operations.

The situation may be further complicated because it is no longer solely a legal dispute between Kalshi and the Attorney General’s Office. The Commodity Futures Trading Commission (CFTC) has also brought its own case in federal court. In that case, now combined with Kalshi’s original lawsuit, the agency is supporting the company and asking Judge Liburdi to find that any action by the Attorney General’s Office is preempted.

However, Judge Liburdi said that, for now, the CFTC’s involvement does not alter his view that Attorney General Mayes is entitled to continue pursuing the case against Kalshi in state court. The company is scheduled for its first hearing next Monday in Maricopa County Superior Court.

What Is Kalshi’s Viewpoint?

Kalshi argues that its operations fall under the regulatory authority of the federal CFTC. Said operations include allowing users to wager on a wide range of outcomes, including political and social events, sports, and weather.

The company’s lawyers told the judge that federal regulation takes precedence over arguments made by Attorney General Mayes, who maintains that Arizona law permits only licensed entities to accept wagers, and only on sporting events. Kalshi has asked Judge Liburdi to issue an injunction preventing the state from pursuing the 20 criminal charges filed against the company.

In a lawsuit filed just days before Attorney General Mayes filed his charges, Kalshi argued that federal law overrides Arizona’s attempt to regulate it under state statutes. The company also claims that forcing it to stop offering event contracts would jeopardize its business, erode trust in the platform’s integrity, and create additional operational challenges.

While this case is being fought, Kalshi secured a crucial victory in another legal case against New Jersey regulators, who wanted to block the company from offering sports-related event contracts to users in the state.