# CFTC v. Arizona ***United States and Commodity Futures Trading Commission v. Arizona*, No. 2:26-cv-01715 (D. Ariz.)**, is the first of the federal government's lawsuits against states over prediction markets to produce a ruling for the government. In May 2026 Judge Michael Liburdi barred Arizona from enforcing its gambling laws, criminal or civil, against [[Kalshi]] and other CFTC-registered exchanges. The page is named for this lead case and covers the whole campaign: eight federal suits and one state-court intervention by the [[CFTC]] under [[Michael Selig]], filed between April and June 2026. The campaign is unusual. A federal regulator is suing states to protect the companies it regulates, from state laws those companies are accused of breaking. It is the [[Regulatory Capture]] argument in the form of a lawsuit. ## The Arizona case - **The state's move.** Arizona's Department of Gaming sent Kalshi a cease-and-desist letter in May 2025. In March 2026 Attorney General [[Kris Mayes]] filed a **20-count criminal information** against Kalshi, including counts over election wagering. Kalshi sued in federal court the same month. - **The federal response.** The CFTC sued Arizona on **April 2, 2026**, the same day it sued Illinois and Connecticut. On **April 10** it won a temporary restraining order blocking the criminal case. - **The ruling.** In early May (dated May 5 in court trackers, reported May 6), Judge [[Michael Liburdi]] granted a **preliminary injunction**. He held that sports event contracts are swaps, that the Commodity Exchange Act gives the CFTC exclusive jurisdiction over swaps on registered exchanges, and that both field and conflict preemption shut out state gambling law. "The 'plain meaning' of Congress's entrustment of 'exclusive' jurisdiction 'necessarily denies jurisdiction' to any entity besides the CFTC," he wrote. "If states could prosecute DCM operators for offering event contracts, the operators would face the prospect of fifty different regulators." That reasoning sits in the Ninth Circuit, which three months later held the opposite in Nevada's case against Kalshi (see [[KalshiEX v. Flaherty]]). An Arizona appeal would go to the same court. ## The campaign, state by state | State | CFTC action | Court · docket | Result so far | |---|---|---|---| | **Arizona** | Sued Apr 2, 2026 | D. Ariz. · 2:26-cv-01715 | TRO Apr 10; **preliminary injunction granted** (Liburdi, May 2026) | | **Connecticut** | Sued Apr 2 | D. Conn. · 3:26-cv-00498 | No ruling found | | **Illinois** | Sued Apr 2 | N.D. Ill. · 1:26-cv-03659 | **Partial preliminary injunction** Oct 2 ([[Martha Pacold]]), decided with Kalshi's and Coinbase's own suits: licensing rules and criminal penalties blocked, fees deferred | | **New York** | Sued Apr 24 | S.D.N.Y. · 1:26-cv-03404 | **TRO denied** Aug 4 after the AG sued Kalshi (July 31); CFTC then used **emergency authority** (Aug 11) to order Kalshi to keep operating | | **Wisconsin** | Sued Apr 2026 | E.D. Wis. · 2:26-cv-00749 | **Preliminary injunction denied** ([[William Griesbach]], late July) | | **Minnesota** | Sued May 2026, as the state's ban was enacted | D. Minn. · 0:26-cv-02661 | **Preliminary injunction granted** ([[Katherine Menendez]], July 27); the ban was blocked before it took effect | | **Rhode Island** | Moved to intervene, May 29 | R.I. Superior Court (AG [[Peter Neronha]]'s suit against Kalshi and Polymarket) | No ruling found | | **New Mexico** | Sued Jun 12, after AG [[Raúl Torrez]] sued Kalshi (Jun 4) | D.N.M. · 1:26-cv-01912 | No ruling found | | **Kentucky** | Sued Jun 23–24, after AG [[Russell Coleman]] sued Kalshi and Polymarket (Jun 17) | E.D. Ky. · 3:26-cv-00049 | No ruling found | Docket numbers are from the Vultax tracker, which checked them against court records; filing dates are from CFTC press releases, CoinDesk, SBC Americas and RotoWire. > [!note] Why the counts disagree > Coverage gives "four," "six" and "nine." All three were true at different dates. Four suits were filed in April (Arizona, Connecticut, Illinois, New York). Wisconsin and Minnesota followed, making six by late May (SBC Americas' count on May 29, which DLA Piper was still using in September). Rhode Island was an intervention in a state-court case, not a new suit. New Mexico and Kentucky came in June. "Nine states" counts Rhode Island; "eight lawsuits" doesn't. ## The scorecard - **For the CFTC:** Arizona, Minnesota, Illinois (partial). - **Against the CFTC:** Wisconsin and New York. Judge William Griesbach in Wisconsin turned the government's logic around: "Of course, if Wisconsin's gambling statutes do not cover sports-related event contracts, then the CFTC's case against the State makes no sense." He also rejected the Third Circuit's reading that sports contracts are swaps. - **Splits inside one circuit.** Wisconsin (denied) and Illinois (granted) are both in the **Seventh Circuit**, so that court now has two district courts on opposite sides. The same is true in the Ninth: Arizona's injunction against a circuit opinion that went the other way in Nevada. Judge Martha Pacold's Illinois opinion gave the government its strongest line: "Swaps are swaps whether they are used to gamble." She added a caution the industry won't like: "Regulatory uniformity, however, does not necessarily entail uniformity in cost." Illinois's per-wager fees may survive. ## The emergency-power escalation When New York's attorney general sued Kalshi on July 31 and a federal judge refused the CFTC's request to stop her, the agency used its emergency authority under the Commodity Exchange Act. RotoWire's timeline calls it only the seventh such use in the agency's history. It ordered Kalshi to keep offering contracts in New York. Selig accused New York of trying to make event contracts "waste away under its iron curtain of state gaming laws before the courts get the chance to issue final rulings." The tool exists to prevent market disruption. Here it was used to keep one company's product available in a state whose attorney general says it is illegal. ## See also - [[KalshiEX v. Flaherty]] — the appeals-court split and the Supreme Court petition - [[CFTC]] · [[Michael Selig]] · [[Kalshi]] · [[Polymarket]] · [[Coinbase]] · [[Crypto.com]] - [[Sports Betting]] · [[Federal Preemption]] · [[Regulatory Capture]] · [[American Gaming Association]] - Judges: [[Michael Liburdi]] · [[William Griesbach]] · [[Katherine Menendez]] · [[Martha Pacold]] - [[Kris Mayes]] · [[Peter Neronha]] · [[Russell Coleman]] · [[Raúl Torrez]] · [[Letitia James]] · [[Keith Ellison]] · [[Josh Kaul]] · [[Kwame Raoul]] · [[William Tong]] - [[Legal Cases Hub]]