Kalshi election case remains blocked ahead of fresh court hearing

Arizona criminal case against Kalshi stays blocked as election question heads back to court

Kris Mayes filed criminal charges in Maricopa County Superior Court in March — twenty counts, the first state criminal action against a prediction market operator in the country. By May, a federal judge had blocked the prosecution entirely. U.S. District Judge Michael Liburdi held that Kalshi operates as a CFTC-designated contract market and that federal law displaced Arizona's gambling statutes before Mayes could apply them.

The Ninth Circuit's ruling on the Nevada sports contracts question does not disturb that outcome. What it does is more interesting, and more complicated, for Mayes's longer-term position.

The appellate court held that the Commodity Exchange Act does not preempt state gambling laws as applied to sports-event contracts. Nevada can enforce its sports betting framework against Kalshi. Arizona sits inside the Ninth Circuit, and Mayes was quick to read the decision as vindicating the theory underlying her enforcement posture — that states retain authority over gambling regulation and that Kalshi's argument would have federalized that authority nationwide, sweeping aside decades of state and tribal oversight in the process.

She is right that the ruling supports that theory, for sports contracts. She is wrong if she reads it as settling her case.

The reason is the carve-out. The Ninth Circuit explicitly did not resolve whether states can regulate election-related contracts. That question was sent back to the Nevada district court. Which means the legal architecture Mayes needs for her criminal charges — the architecture that says Arizona can reach Kalshi's election wagering products — remains unbuilt. Judge Liburdi's preemption ruling is still standing. The criminal case is still blocked. The Ninth Circuit gave Mayes a stronger doctrinal foundation for sports regulation and left the harder question for another day.

I've watched regulators read favorable rulings as more than they are. The temptation is understandable. When a court hands you the principle, it feels like it handed you the case. But courts are precise instruments. The Ninth Circuit was precise here: sports contracts, yes; election contracts, remanded. Those are different products, different regulatory histories, and almost certainly different outcomes under the same framework.

The federal government's intervention makes the trajectory steeper. The suit against Arizona, Connecticut, and Illinois over their prediction market enforcement reflects a position that CFTC oversight is not partial — that it covers the full range of contract markets, not just the ones states find easiest to analogize to sportsbooks. Mayes is fighting that position with one hand while the Ninth Circuit has handed her a useful weapon for the other.

The open question, now in the Nevada district court on remand, is whether election contracts are structurally distinguishable from sports contracts under the Commodity Exchange Act's preemption framework. The answer will depend on whether a court reads election outcomes as more analogous to regulated financial instruments than to athletic contests — and on how the CFTC's designation of Kalshi as a contract market applies across product categories rather than product by product.