A legal fight over prediction markets and state gambling authority is now on hold in Arizona while federal appeals judges weigh several related cases.
Kalshi, the Commodity Futures Trading Commission, the Justice Department, and Arizona regulators jointly asked a federal judge Friday (May 15) to pause litigation involving sports-event contracts offered on federally regulated exchanges. The request was filed in the U.S. District Court for the District of Arizona and asks Judge Michael T. Liburdi to freeze proceedings until the Ninth Circuit rules in at least one pending appeal tied to prediction-market platforms.
The filing says “questions that bear directly on this case are pending before the Ninth Circuit.”
The Arizona case involves Kalshi and North American Derivatives Exchange, which operates as Crypto.com. They are suing Arizona Attorney General Kristin K. Mayes and Arizona Department of Gaming Director Jackie Johnson over whether the state can enforce gambling laws against contracts listed on CFTC-regulated exchanges.
Arizona Ninth Circuit appeals could reshape Kalshi and prediction market oversight
The latest filing follows a May 5 ruling in which Liburdi granted a preliminary injunction favoring the United States and the CFTC. It temporarily blocked Arizona from taking enforcement action against certain event contracts while the case proceeds. The same day, the judge directed both sides to explain whether the litigation should be paused.
The parties pointed to three Ninth Circuit appeals they believe could directly influence the Arizona case: North American Derivatives Exchange, Inc. v. State of Nevada, KalshiEX, LLC v. Assad, and Robinhood Derivatives, LLC v. Dreitzer. According to the filing, those appeals “were consolidated for argument held April 16, 2026.”
Another closely watched matter, Blue Lake Rancheria v. Kalshi, Inc., is scheduled for oral arguments in July before a different appellate panel.
Recent federal rulings have increasingly favored prediction-market operators. Earlier this month, a federal appeals court sided with Kalshi in separate disputes involving New Jersey and Arizona, reinforcing arguments that federal commodities law may preempt some state gambling restrictions. The Justice Department and the CFTC have also backed lawsuits challenging state enforcement efforts, arguing that federally approved event contracts fall under federal oversight instead of state gaming regulation.
In Friday’s filing, the parties argued that a stay would promote “economy of time and effort for [the Court], for counsel, and for litigants.” They also said that “the orderly course of justice” would be served while appellate courts sort through overlapping legal questions.
Arizona officials maintained that the injunction is causing “severe, ongoing injury” because it prevents the state from enforcing gambling laws and blocks authorities from “engaging in any subpoena process or other compulsory investigative process related to event contracts listed on CFTC-regulated designated contract markets.”
Kalshi disagreed, arguing Arizona “suffer[s] no cognizable injury from an injunction barring the enforcement of preempted state laws.”
Featured image: Kalshi / Canva
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