KEY TAKEAWAYS
- The CFTC and the Justice Department sued Arkansas in federal court to block Attorney General Tim Griffin’s state court case against Kalshi.
- The complaint cites the CFTC’s new rule against geographic restrictions as directly conflicting with state law.
- Arkansas is the 11th state the CFTC has sued, bringing the agency’s campaign into the Eighth Circuit, where federal judges in Minnesota and Iowa reached opposite conclusions.
The Commodity Futures Trading Commission took Arkansas to federal court Thursday, asking a judge to halt Attorney General Tim Griffin’s lawsuit against Kalshi and bar the state from pursuing any other federally regulated exchange.
The CFTC announced the action Friday. CFTC Chairman Michael Selig said the agency will continue to defend its jurisdiction over prediction markets.
“As prediction markets continue to prove their value in being useful for risk management and providing the public with valuable information about the future, Arkansas seeks to shut down event contracts ranging from sports and politics to other important world events,” Selig said in the announcement. “The Commission will not let state interference thwart its regulatory efforts and destroy federally regulated markets.”
The complaint asks the court to stop Arkansas from enforcing state laws against CFTC-regulated entities, affiliates and partners.
The CFTC and the U.S. Department of Justice filed the complaint in the U.S. District Court for the Eastern District of Arkansas. That came after Griffin sued Kalshi last week, accusing it of running an unlicensed gambling platform. Arkansas is the 11th state the CFTC sued to protect federal authority.
States along the Mississippi River were among the busiest fronts in the prediction markets fight this week, as the CFTC filed the Arkansas suit the same day Louisiana Attorney General Liz Murrill sued 10 operators. Within hours, a judge issued a temporary restraining order barring the companies from offering event contracts in Louisiana. Missouri is also in litigation with several operators.
CFTC complaint targets consumer protection law
Griffin did not use Arkansas gambling statutes as his main argument. His complaint relies largely on the Arkansas Deceptive Trade Practices Act (ADTPA) and a common law unjust enrichment claim. In response, the CFTC’s complaint argues that both are preempted as applied to event contracts on designated contract markets (DCMs). It also names the state’s gambling code and casino rules.
The complaint also calculates how much Arkansas could pursue in penalties. The ADTPA allows civil penalties of up to $10,000 per violation, while Kalshi earns between $0.07 and $2.63 in fees per 100 contracts on most markets. If Arkansas pursues penalties per violation, the CFTC wrote, they “would dwarf Kalshi’s income from its activities in Arkansas and could reach the hundreds of millions of dollars.”
The filing is the first CFTC complaint against a state since the agency issued its impartial access interpretation earlier this month. That guidance gives DCMs 30 days to drop geographic restrictions or explain why they cannot. The CFTC now uses that interpretation to argue that state enforcement would force exchanges to violate the rule by denying event contracts to Arkansas.
The complaint also cites October’s CFTC interim rule, which excludes state-licensed sportsbook and casino wagers from the definition of “swap.”
Griffin’s Kalshi case built on year of groundwork
Griffin began making his case against prediction markets in October 2025, when he issued a formal opinion concluding that sports event contracts are gambling that requires a license.
“The fact that a company has rebranded this gambling activity as a ‘prediction market’ does not protect it from scrutiny,” Griffin wrote.
In his complaint this month, Griffin alleges that thousands of Arkansas residents, including those under 21, trade on Kalshi and that the company never paid sales or use taxes.
“It doesn’t take a genius to understand that wagering money on whether the Razorbacks win or lose is gambling,” Griffin said.
He also pointed to Kalshi’s self-exclusion tools, deposit limits and partnership with the National Council on Problem Gambling as evidence that “its actions speak louder than its labels.”
Griffin also sued sweepstakes operator VGW earlier this month. Polymarket and Crypto.com‘s OG.com sued Griffin and seven Arkansas Racing Commission members this week, pointing to the Kalshi case as proof the state would come after them next.
Eighth Circuit becomes key court as national split deepens
The CFTC’s suit puts the prediction markets jurisdictional fight in the Eighth Circuit Court of Appeals, which has not yet ruled on the preemption question. Several of its district courts already disagree.
A Minnesota judge granted the federal government a preliminary injunction in July. In September, U.S. District Judge Stephen Locher denied Kalshi an injunction against Iowa, finding the company unlikely to win on preemption.
Elsewhere, recent rulings largely favor the states. The Sixth Circuit sided with Ohio and Tennessee, the Ninth Circuit with Nevada, and the Second Circuit upheld injunction denials in New York and Connecticut. The Ninth Circuit also refused Kalshi’s request for rehearing en banc, while Robinhood and Crypto.com are seeking cert from the Supreme Court on related cases.
The Third Circuit remains the only federal appeals court to rule for Kalshi. New Jersey‘s request for U.S. Supreme Court review is pending.
