CFTC seeks to block Arizona's enforcement against Kalshi, arguing that sports prediction contracts are federally regulated financial derivatives

The Commodity Futures Trading Commission (CFTC) and the U.S. Department of Justice submitted documents to a federal court on Tuesday, requesting to block Arizona from applying its gambling laws to the prediction market operator Kalshi.

Federal regulators argue that contracts linked to sports events, elections, and other real-world events fall under a financial derivative known as "swaps," which should be subject to federal regulation under the Commodity Exchange Act, rather than governed by state gambling laws. Arizona had previously filed criminal charges against Kalshi under state gambling laws, with a hearing scheduled for April 13.

The federal appeals court in New Jersey had previously ruled in favor of Kalshi, determining that its sports contracts are presumed legal under federal law in the absence of CFTC intervention, but courts in other jurisdictions have allowed state-level enforcement actions to proceed. If the court ultimately accepts the CFTC's position, prediction markets could operate nationwide under a unified federal framework.

This content is provided for general informational purposes only and doesn't constitute financial, investment, legal, or tax advice. Any events, rewards, online promotions, or related information mentioned herein should not be considered a recommendation, solicitation, or invitation to purchase, sell, trade, or otherwise deal in any crypto assets. Crypto assets are highly volatile and may result in loss. The availability of WEEX services, products, and related events may vary by region. You are responsible for ensuring that your participation is in accordance with applicable local laws and regulations.