Judge allows Arizona to press charges against prediction markets gambling site

In an opinion late Wednesday, U.S. District Court Judge Michael Liburdi acknowledged there is a legal conflict between Kalshi and the state about whose laws take precedence. But he said that, for the moment, he is going to allow Attorney General Kris Mayes to continue to press charges.

Kalshi contends that its activities, like letting people bet on everything from political and social events to sports and weather, are regulated by the federal Commodity Futures Trading Commission.

The company's attorneys told the judge that federal oversight outweighs arguments by Mayes, who says state laws allow only regulated entities to take wagers — and only on sporting events. The company asked Liburdi to issue an injunction barring the state from pursuing the 20 criminal charges it has brought against Kalshi.

Tied up in this is whether the various events Kalshi's customers can wager on fall under the definition of "swaps" within federal law. Those involve transactions where people can agree to bet money on some future contingent event.

So, for example, Arizonans logging into the Kalshi website can put money down on what they think will be the rate of the U.S. tariff on China on July 1, how high the unemployment numbers will go, and even whether Dune Part Three will win an Oscar next year. The price of buying a swap goes up and down depending on how many people bet on an individual outcome.

Liburdi, in a detailed 15-page ruling, said it is premature for him to rule just yet on the question of what is a "swap." But while the case is pending in his court, he will not block the state from pursuing its criminal charges.

The key, the judge explained, is the Anti-Injunction Act.

It says federal courts cannot block proceedings in state court except in narrow exceptions. Liburdi said that act applies as long as there is a case in state court.

This could be complicated by the fact that this is no longer just a legal dispute between Kalshi and the Attorney General's Office.

The Commodity Futures Trading Commission has filed its own suit in federal court. In that case, now consolidated with Kalshi's original lawsuit, the agency is siding with the company and urging Liburdi to rule that any action by the Attorney General's Office is preempted.

Liburdi, however, said that for now, the intervention of the Trump administration does not change his belief that Mayes is free to pursue Kalshi in state court. The company faces its first hearing next Monday in Maricopa County Superior Court.

Mayes has charged Kalshi with four counts of illegal wagering on elections, all based on bets filed by an investigator from her office between December 2025 and February 2026. One of those, for example, is whether Andy Biggs will win the Republican Party primary in his bid for governor.

A spokesman for Mayes declined to say which way the investigator bet. But he said violations of election wagering laws by corporate entities each carry a maximum penalty of $10,000.

The remaining 16 counts involved sports bets, ranging from the outcome of a women's basketball game between Arizona State University and the University of Arizona, to whether Devin Booker would score more than 25 points in a specific game between the Phoenix Suns and the Indiana Pacers. These each carry $20,000 penalties.

A spokesman for Mayes said Wednesday night that lawyers for the office were analyzing the ruling.

"But we believe the court made the right decision," he said.

There was no immediate response from Kalshi.