The U.S. Justice Department and Commodity Futures Trading Commission sued Arkansas to block its enforcement action against Kalshi, arguing that contracts traded on CFTC-registered exchanges fall under exclusive federal authority. The agencies seek injunctions barring Arkansas from investigating or enforcing state laws against federally regulated exchanges and related entities over those contracts; the court has not ruled on that request.
Arkansas alleges that Kalshi’s sports contracts are unlawful gambling and that the company misled consumers. It seeks restitution, unpaid taxes and penalties of up to $10,000 per violation, which federal authorities warn could total hundreds of millions of dollars. Courts have issued conflicting rulings in similar disputes over whether states can apply gambling rules to sports prediction contracts.
