A federal judge has denied Kalshi’s motion for a temporary restraining order (TRO) and a preliminary injunction against Arizona as the Commodity Futures Trading Commission (CFTC) steps up its attempts to prevent the state from enforcing its gaming laws against the prediction market platform.
Judge Michael Liburdi of the U.S. District Court for the District of Arizona rejected Kalshi’s attempt to obtain temporary relief against Arizona Attorney General Kristin Mayes and the Arizona Department of Gaming (ADG). The company filed a complaint for a permanent injunction against the Arizona officials last month.
Statute prevented court from granting injunction, says judge
In a court order published on Wednesday, Liburdi determined that the court could not issue a preliminary injunction or a TRO because the Anti-Injunction Act (AIA) prevents it from doing so.
As noted by the judge, the AIA essentially limits federal court remedies that may interfere with state judicial proceedings. The act states that a U.S. court may not grant an injunction to stay proceedings in a state court, except where expressly authorized by an Act of Congress, where necessary “in aid of its jurisdiction”, or where necessary to protect or facilitate its judgments.
Liburdi disagreed with Kalshi’s arguments that its request should fall under these exceptions.
“The Court finds that the AIA applies and the preliminary injunction Kalshi requests does not fall within any exception to the application of the AIA,” wrote Liburdi. “The Court is barred by statute from issuing the injunction, so it must deny Kalshi’s requests for preliminary relief.
“The exception to the AIA applies only ‘to injunctions issued at the request of the United States,’ and the question before this Court is whether to grant Kalshi’s request for a preliminary injunction. Although the basis for granting Kalshi preliminary injunctive relief would be largely identical to the basis for granting a permanent injunction, the federal government has not yet requested the preliminary relief that this Court is assessing. So the Court will not apply the exception here.”
Kalshi and Arizona exchange shots
Arizona first issued a cease-and-desist letter to Kalshi in May 2025, accusing it of offering what is tantamount to illegal wagering in the state through its sports event contracts. Ten months later, on March 12, 2026, Kalshi sued Mayes and ADG leaders in the Arizona district federal court, claiming it was exposed to a “substantial risk” or “irreparable harm” from Arizonan authorities
Kalshi’s lawsuit also claimed that its counsel tried to contact Mayes “to obtain written assurances of non-enforcement” but was met with silence, despite the fact that Arizona’s AG allegedly “previously assured Kalshi that it would not pursue an enforcement action without providing prior notice.”
Four days after Kalshi sued in federal court, Arizona became the first state to file criminal charges (rather than a civil complaint) against the company in state court. Mayes’ office is pursuing 20 misdemeanor charges against Kalshi in the Superior Court of the State of Arizona filing, writing that it offers a range of “bets” on markets including professional and college sports and state and federal elections in violation of multiple state laws.
Kalshi Head of Communications Elisabeth Diana told SBC Americas after that state court filing that Arizona had made “paper-thin arguments”.
“States like Arizona want to individually regulate a nationwide financial exchange, and are trying every trick in the book to do it,” added Diana.
CFTC asks for its own Arizona injunction
On April 8, the same day that Liburdi denied Kalshi the TRO and preliminary injunction it sought, the CFTC filed a motion in the same court asking the court to grant those same temporary relief measures to the federal agency to halt “Arizona’s efforts to apply state criminal and gambling laws against CFTC-regulated prediction markets”.
The CFTC filed that motion in Arizona just days after it and the U.S. Department of Justice together submitted court complaints against leading officials in the Grand Canyon State, as well as Connecticut and Illinois, which accused the states of overstepping with “aggressive and overzealous” attempts to rein in federally regulated prediction markets.
“Arizona’s decision to weaponize preempted state criminal law against companies that comply with a comprehensive federal regime sets a dangerous precedent,” said CFTC Chairman Michael Selig in a press release issued on Thursday. “The CFTC is committed to vigorously defending its exclusive authority over prediction markets. We are asking the court to send a clear message that intimidation is not an acceptable tactic to circumvent federal law.”
“As I’ve said repeatedly, the CFTC will vigorously defend its exclusive authority over prediction markets,” added Selig in a post on social media site X. “The agency won’t stand for intimidation by states seeking to nullify federal law, and yesterday’s motion in Arizona builds upon last week’s filing against states using state criminal and gambling laws to interfere with CFTC-regulated prediction markets.”
The commission added that it is seeking declaratory judgments confirming that federal law grants the CFTC exclusive authority to regulate event contracts, as well as requesting permanent injunctions preventing the states from “enforcing preempted state laws” against its registrants, which include numerous companies that now offer event contracts on sports in the majority of the country.
Liburdi may consider whether the CFTC’s forthcoming motion for preliminary injunction falls within the exceptions to the AIA for injunctions sought by the federal government, but he determined that the request from Kalshi does not qualify.
