Arizona Attorney General Pursues Online Gambling Site Kalshi as Judge Blocks Injunction
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Federal Judge Lets Arizona Prosecute Kalshi Over Federal Gaming Claims
A federal judge has refused to block Arizona from pursuing criminal charges against Kalshi, an online gambling platform that allows bets on political events, sports outcomes, and social predictions.
In a detailed 15-page ruling issued on April 8, U.S. District Court Judge Michael Liburdi said the state can proceed with its case despite Kalshi's argument that federal law preempts Arizona's gaming laws.
The case has become a legal showdown between state authority and federal regulation, with the Commodity Futures Trading Commission now filing its own lawsuit to support Kalshi.
Key Points:
- Kalshi faces 20 criminal charges, including four for illegal election wagering and 16 sports-related counts
- Maximum penalties range from $10,000 per election violation to $20,000 per sports bet violation
- The company contends its platform is regulated by federal law through the CFTC
- Arizona Attorney General Kris Mayes argues only state-licensed entities can take wagers, and only on sporting events
While the case is pending in his court, I won't block the state case from pursuing its criminal charges, the judge explained.
The Legal Battle Over What Constitutes a Swap
At the heart of the dispute is whether Kalshi's betting products fall under the definition of "swaps" in the federal Commodity Futures Act. These transactions allow people to agree to bet money on future contingent events.
Kalshi customers can currently wager on a wide range of outcomes, including:
- The rate of U.S. tariffs on China by July 1
- Future unemployment numbers
- Whether the movie Dune Part Three will win an Oscar
- Arizona gubernatorial race outcomes
The price of buying a swap fluctuates depending on how many people bet on individual outcomes.
Judge Liburdi said it is "premature" to rule on whether Kalshi's products qualify as swaps at this stage of the litigation.
Anti-Injunction Act Shields State Prosecution
The judge's decision rests on the federal Anti-Injunction Act, which limits when federal courts can block proceedings in state courts.
Liburdi explained that the Act applies as long as there is a pending case in state court, which remains true in this situation. Kalshi had asked for an injunction to stop the state from pursuing the 20 criminal charges, but the judge declined to issue one.
The key, the judge explained, is something called the Anti-Injunction Act. It says that federal courts can't block proceedings in state court except in narrow exceptions.
Federal Intervention Enters the Case
The dispute has evolved beyond a simple legal battle between Kalshi and the Attorney General's Office. The Commodity Futures Trading Commission filed its own suit in federal court and now has its case consolidated with Kalshi's original lawsuit.
The Trump administration's CFTC is siding with Kalshi, urging Judge Liburdi to rule that any action by the Attorney General is preempted by federal law.
However, Judge Liburdi noted that for the moment, the intervention does not change his belief that Mayes is free to pursue Kalshi in state court.
The judge did agree to hear arguments from CFTC attorneys that they are entitled to block Mayes' case, even if Kalshi is not.
Upcoming Court Hearings
Kalshi faces its first hearing on April 13 in Maricopa County Superior Court.
Attorney General Mayes has charged the company with four counts of illegal wagering on elections based on bets filed by an investigator from her office between December 2025 and February 2026.
One of those election wagers involved whether Andy Biggs would win the Republican Party primary in his bid for governor. A spokesman for Mayes declined to disclose which way the investigator bet. Each election wager carries a maximum penalty of $10,000.
The remaining 16 counts involved sports bets ranging from:
- The outcome of a women's basketball game between Arizona State University and the University of Arizona
- Whether Phoenix Suns star Devin Booker would score more than 25 points in a specific game against the Indiana Pacers
Each sports count carries a $20,000 penalty.
Attorney General Response
A spokesman for Mayes said on April 8 that the office's lawyers were analyzing the ruling.
But we believe the court made the right decision, the spokesman said.
There was no immediate response from Kalshi.
Broader Implications for Online Gaming
This case raises important questions about the future of online gambling platforms operating in Arizona. The decision allows the state to proceed with its prosecution while the federal preemption question remains unresolved.
The outcome could significantly impact how Arizona enforces its gaming laws and how online betting platforms navigate the complex intersection of state and federal authority.