Judge bars Arizona from regulating prediction market operators and pauses prosecution of Kalshi

PHOENIX (AP) — A federal judge on Friday temporarily barred Arizona from enforcing its gambling laws against predictive market operators and put the brakes on a criminal wagering case that the state has filed against Kalshi.

U.S. District Judge Michael Liburdi's ruling means a Monday arraignment hearing for Kalshi has been called off. State prosecutors allege Kalshi is running an illegal gambling operation. The order was issued in a lawsuit filed by the Trump administration.

The judge's order said the federal Commodity Futures Trading Commission had sufficiently shown that “event contracts” fall within the Commodity Exchange Act's definition of “swaps,” and that it had demonstrated a reasonable chance of success in showing that the act preempts Arizona law.

“The Act grants the CFTC ‘exclusive jurisdiction’ over the regulation of ‘swaps,’” traded or executed on a Designated Contract Markets, the order said.

Kalshi operates by allowing customers to buy and sell “Yes” or “No” contracts tied to the probable outcome of an event.

The commission had sued Arizona in response to cease-and-desist letters sent to Kalshi from state gambling regulators and the criminal charges filed against the prediction market operator. The commission argued Arizona is intruding on its exclusive federal power to regulate national swaps markets.

Liburdi had previously denied Kalshi’s attempt to bar prosecutors from moving forward with the case and declined a request from the company for a ruling saying federal law trumps Arizona’s gambling laws. Liburdi said it was too early in the case for him to rule on that issue.

State prosecutors have charged Kalshi with 20 misdemeanor counts of wagering for allegedly accepting bets on political outcomes, college sports and individual player performance.

Arizona, the first state to file criminal charges against Kalshi, prohibits operating an unlicensed wagering business and betting on elections. The criminal charges mark a new front in a high-stakes legal battle over whether prediction markets should be subject to the same rules as gambling companies.

Kalshi maintains it’s a financial marketplace rather than a gambling operation and should only have to answer to the federal Commodities Futures Trading Commission, not the state of Arizona.

“The attorney general's office disagrees with the court's ruling and we will evaluate our next steps,” said Richie Taylor, a spokesperson for the Arizona Attorney General's Office.

Robert DeNault, head of enforcement at Kalshi, said in a posting on X that the ruling is “a step in the right direction.”

“Arizona’s decision to weaponize state criminal law against companies that comply with federal law sets a dangerous precedent,” Michael Selig, chairman of the Commodity Futures Trading Commission, said in a statement. “And the court’s order today sends a clear message that intimidation is not an acceptable tactic to circumvent federal law.”

Kalshi has said its product is different from gambling operations because Kalshi’s customers engage in “swaps” between one another instead of betting against the “house.”

In a lawsuit filed just days before prosecutors leveled the criminal charges, Kalshi argued federal law trumps Arizona’s efforts to subject it to state statute. It also contends that shutting down its ability to offer event contracts would threaten its viability, undermine confidence in the integrity of its platform and cause other problems for the business.

The company said Arizona filed the charges to interfere with its lawsuit.

Lawyers for the state contend Kalshi has marketed itself as a platform for sports and election betting and that Arizona should be able to enforce its gambling laws to hold Kalshi accountable for flouting state law.

Kalshi sued Arizona, Utah and Iowa in attempts to stop anticipated state actions against the platform. Other states have taken some form of legal action against Kalshi.

So far, the outcomes have been mixed. Federal and state judges in Nevada and Massachusetts, respectively, issued early rulings in favor of states looking to ban Kalshi and its competitor Polymarket from offering sports being in their states, while federal judges in New Jersey and Tennessee have ruled in favor of Kalshi.

Earlier this month, the federal government filed lawsuits against Connecticut, Arizona and Illinois challenging their efforts to regulate prediction market operators.

The Trump administration has so far backed the platforms.

President Donald Trump’s eldest son is an adviser for both Kalshi and Polymarket and an investor in the latter. Trump’s social media platform Truth Social is also launching its own cryptocurrency-based prediction market called Truth Predict.

FILE - A banner for the prediction market platform Kalshi hangs from a building in Washington, Wednesday, April 1, 2026. (AP Photo/Allison Robbert, File)

WASHINGTON (AP) — The NAACP is calling on Black athletes and fans to boycott the athletic programs of public universities in states that are taking steps that the nation's oldest civil rights group says are restricting Black voting rights.

Launched on Tuesday, the “Out of Bounds” campaign urges prospective Black athletes, their families, alumni and fans to “withhold athletic and financial support” from major public universities in states that “have moved to limit, weaken or erase Black voting representation.”

If Black athletes participate in the boycott, it could deplete rosters for powerhouse football and basketball programs across the Southeastern Conference and Atlantic Coast Conference.

The NAACP is among groups responding to a wave of gerrymandering in the aftermath of a Supreme Court ruling that winnowed a key provision of the Voting Rights Act of 1965.

The boycott comes as civil rights activists have mobilized across the South to protest redistricting plans by Republican state legislatures that eliminate majority-Black congressional districts after the high court's ruling. Activists have looked for pressure points to dissuade GOP-led states from redistricting maps, including calls for mass protests and economic boycotts.

“Across the South, Black athletes have helped build some of the most profitable college athletic programs in America,” said NAACP President Derrick Johnson. Johnson noted that the programs “generate hundreds of millions of dollars in annual revenue, national television value, alumni donations, merchandising sales, ticket sales, and brand equity — much of it powered by Black football and basketball talent.”

The NAACP’s campaign calls out Alabama, Florida, Georgia, Louisiana, Mississippi, Texas and South Carolina as states to boycott, arguing that the athletic programs of those states' flagship universities are especially reliant on Black athletic talent and should protect Black political interests.

“Black athletes should not be asked to generate wealth, prestige, and power for state institutions while those same states strip political power from Black communities,” said Johnson.

Black lawmakers themselves are also putting pressure on athletic leagues to take action against Republican-led states that may redistrict longtime Black members of Congress.

The Congressional Black Caucus on Monday sent a letter to the commissioners of the SEC and ACC athletic conferences, as well as NCAA President Charlie Baker, that its members will oppose the SCORE Act, a bill to standardize athletes’ contracting rights across the country, unless conference leaders oppose GOP-led redistricting efforts in states that include major conference members.

“The Congressional Black Caucus believes institutions that profit from Black talent and Black communities have a responsibility to stand with those communities when their fundamental rights are under attack," the CBC said in a Monday statement. “Silence in the face of injustice is not neutrality — it is complicity.”

A man sings a spirtual song during a voting rally, Saturday, May 16, 2026, in Montgomery, Ala. (AP Photo/Mike Stewart)

A vote pin is seen on the lapel of Sen. Raumesh Akbari, D-Memphis, during a rally after a special session of the state legislature to redraw U.S. Congressional voting maps Thursday, May 7, 2026, in Nashville, Tenn. (AP Photo/George Walker IV)

FILE - NAACP President Derrick Johnson arrives at the 57th NAACP Image Awards, Feb. 28, 2026, in Pasadena, Calif. (AP Photo/Chris Pizzello, File)