Circuit revives Arizona gambling prosecution of Kalshi
The Ninth Circuit Court of Appeals has revived Arizona's effort to prosecute Kalshi for allegedly violating state gambling laws, reversing a federal judge's earlier block. The ruling comes alongside a separate appeals decision allowing Nevada gaming officials to proceed against the prediction market platform, according to Bloomberg Intelligence senior litigation analyst Elliott Stein. Kalshi's CFTC registration no longer blocks state enforcement in either jurisdiction.
Kalshi must now defend against Arizona prosecution after the Circuit stripped its federal shield. The ruling follows a parallel Nevada loss that together shrinks the territory where CFTC designation protects contract validity. State attorneys general in Connecticut and Baltimore already rejected federal registration as a defense, and each new court win makes the next filing cheaper.
Kalshi's legal spend compounds across parallel cases while its national sports market fragments. Traders hold positions whose legality shifts with geography, not regulation. The circuit split with the Third Circuit raises Supreme Court review odds, but that timeline stretches across months of uncertainty while state bans accumulate.