• Federal judge blocks Arizona from enforcing gambling laws against Kalshi, siding with CFTC jurisdiction over event contracts.

• Court suggests Kalshi contracts qualify as swaps, placing oversight under federal Commodity Exchange Act.

  

• Kalshi dominates U.S. prediction markets with 89% share, $22 billion valuation, and rapid user growth.

  

A federal judge in Arizona temporarily blocked the state from enforcing gambling laws against Kalshi, siding with federal regulators. The ruling pauses enforcement until April 24 and signals that event-based contracts may fall under federal derivatives law rather than state gambling rules.

U.S. District Court Sides With Federal Regulators

On 10th April, U.S. District Judge Michael Liburdi granted a temporary restraining order preventing Arizona from pursuing criminal or civil action against Kalshi. The decision followed a request from the Commodity Futures Trading Commission (CFTC), which argued the platform operates under federal jurisdiction.

Arizona had filed 20 misdemeanor counts against Kalshi, accusing the company of running an unlicensed wagering business involving elections and sports outcomes. 

However, the court indicated the CFTC is likely to succeed in arguing that Kalshi’s contracts qualify as “swaps” under the Commodity Exchange Act, placing them under federal oversight.

The restraining order remains active until April 24, when the court will decide whether to issue a longer-term injunction.

Why States Are Challenging Kalshi?

This is because Kalshi allows users to trade “Yes” or “No” contracts based on event outcomes. The company argues these are financial contracts traded between participants, not bets placed against a house.

State regulators, including Arizona, view the activity as gambling. Last week, Nevada extended a ban on Kalshi, while Utah lawmakers passed legislation targeting similar prediction contracts.

The disagreement centers on whether event markets should be treated as derivatives or betting platforms.

Kalshi’s Rapid Growth Adds Stakes

The legal battle comes as Kalshi rapidly expands. As of April 2026, the platform is valued at around $22 billion following a March funding round. It currently accounts for roughly 89% of U.S. prediction market volume, making it a dominant player.

User growth has also surged. Monthly active users increased from about 600,000 at the start of 2025 to around 5.1 million by early 2026. Trading activity is accelerating as well. In March 2026 alone, Kalshi recorded $13.1 billion in transaction volume, marking a 25.2% jump from the previous month.

These numbers highlight why the classification debate has become more important for regulators.

Next Key Date: 24th April

The temporary order remains in effect until April 24, when the court will consider issuing a preliminary injunction. Meanwhile, Kalshi continues its civil claims against several states

The case may shape how prediction markets are regulated in the U.S., determining whether they are treated as financial instruments or gambling products.