CFTC’s Bid to Enjoin Arizona’s Criminal Case Fails
Update: This story has been updated to reflect a Friday evening press release announcing a temporary restraining order barring criminal proceedings in Arizona. The original article begins at the ‘Original proceedings’ heading
On Friday evening, the CFTC announced that a temporary restraining order would block Arizona’s criminal case against Kalshi.
The temporary restraining order comes two days after the CFTC filed for one. It also filed cases against Illinois and Connecticut on April 2.
Original proceedings
The CFTC moved to enjoin Arizona from pursuing criminal charges against Kalshi for violating state gaming laws on Wednesday. The judge allowed the criminal case against Kalshi to proceed.
Arizona’s attorney general filed 20 misdemeanor criminal charges against Kalshi for wagering in March. Kalshi filed to stop Arizona from bringing those charges, and a federal judge denied the motion on Wednesday.
“The CFTC is committed to vigorously defending its exclusive authority over prediction markets,” CFTC Chairman Michael Selig wrote in a press release. “We are asking the court to send a clear message that intimidation is not an acceptable tactic to circumvent federal law.”
AP News reports that an arraignment is scheduled for Monday.
The ruling in Arizona arrived only days after Kalshi’s Third Circuit victory on its preliminary injunction motion on Monday. In a 2-1 decision, the Third Circuit agreed that Kalshi’s contracts were under the exclusive jurisdiction of the CFTC and that Kalshi was likely to succeed on the merits.
Two more oral arguments are scheduled in separate Circuit Courts.
Fourth and Ninth Circuits
The Ninth Circuit Court of Appeals is scheduled to hear oral arguments in a consolidated case on April 16. Kalshi, Robinhood, Crypto.com, and the CFTC will argue against Nevada’s actions against prediction markets.
Nevada dissolved Kalshi’s preliminary injunction in November. Robinhood paused sports contract trading in Nevada in November, and Crypto.com had its own preliminary injunction denied in October. Kalshi, Robinhood, and Crypto.com have similar complaints, so the Ninth Circuit will hear from all of them.
The Fourth Circuit is scheduled to hear oral arguments on May 7. Kalshi is appealing its loss on its preliminary injunction motion in Maryland.
If the Fourth or Ninth Circuit rules against Kalshi, then there will be a circuit split between the Third Circuit and the unfavorable ruling. That makes the Supreme Court more likely to hear one of the sports contract cases.
Polymarket adds new markets
While Kalshi battles for all its contracts in court, Polymarket U.S. has added new markets. Its Politics section includes two economic markets and two election markets live:
- House midterm winner
- Senate midterm winner
- April’s Fed decision
- April’s year-over-year CPI
Polymarket only makes up 3% of the regulated U.S. prediction market industry compared to Kalshi’s 91% share. Most of Polymarket’s volume remains on its crypto site.