US government sues Arkansas over Kalshi gambling crackdown
The US Department of Justice (DOJ) and Commodity Futures Trading Commission (CFTC) have launched legal action against Arkansas, seeking to prevent the state from enforcing its gambling laws against prediction market operator Kalshi.
The federal lawsuit, filed on November 12, argues that the CFTC has exclusive authority over event contracts traded on federally regulated derivatives exchanges, including Kalshi.
The agencies are seeking preliminary and permanent injunctions against Arkansas and Attorney General Tim Griffin, arguing that the state’s enforcement action interferes with federal financial regulations.
The lawsuit follows legal proceedings launched by Griffin on November 4, accusing Kalshi of operating an illegal gambling platform without obtaining the necessary state licences or complying with gambling taxes and consumer protection requirements.
“Arkansas law is concerned with substance, not semantics, and in Arkansas, gambling is regulated to protect consumers,” Griffin said when announcing the original lawsuit.
“Instead of obtaining the licenses, submitting to the oversight, complying with the restrictions, and paying the taxes required of lawful gambling operators in Arkansas, Kalshi opened its platforms to Arkansas consumers, including individuals as young as 18 years old, encouraged them to wager real money on sporting and entertainment events, and profited from those wagers.”
Kalshi has rejected the allegations, maintaining that its event contracts are financial derivatives rather than gambling products.
“Kalshi is a federally regulated financial exchange,” a company spokesperson said in response to Arkansas’s original lawsuit.
“Markets can’t operate when the rules change at every state line, which is why Congress created a single federal regulator, with nationwide rules. Kalshi follows those rules and will defend against Arkansas’s baseless claims.”
The federal intervention comes amid growing legal disputes between prediction market operators and US state gambling regulators, with Louisiana separately securing a temporary restraining order against Kalshi, Polymarket and other operators on November 12.
