Why It Matters
The Arizona attorney general’s office is seeking to enforce state gambling statutes against a major prediction market firm, challenging federal regulatory interpretations that shield such platforms from local prosecution.
What Happened
Attorney General Kris Mayes requested the 9th U.S. Circuit Court of Appeals dissolve an injunction issued by Federal Judge Michael Liburdi earlier this year. The order had blocked Mayes from prosecuting Kalshi for violating Arizona gambling and election betting laws. Mayes’ office filed the request earlier this month, citing a recent appellate ruling in KalshiEX, LLC v. Assad that determined sports betting is not protected by federal commodity laws.
The CFTC acknowledged that Liburdi’s legal reasoning conflicts with the new precedent but asked the appeals court to delay lifting the injunction until Kalshi’s bid for an en banc rehearing is resolved. Federal appellate rules automatically pause the formal issuance of the three-judge panel’s ruling in Assad due to this rehearing request.
By the Numbers
One — injunction issued by Judge Liburdi earlier this year blocking prosecution
Three — Trump-appointed appellate judges who rejected Liburdi’s interpretation last month
One — recent 9th Circuit ruling in Assad establishing sports betting is not a protected swap
Zoom Out
The legal dispute centers on the definition of “swaps” under the Commodity Exchange Act. In May, Judge Liburdi sided with Kalshi, concluding sporting events qualify as “events” and “occurrences” under federal law. Last month, a three-judge panel rejected that view, holding that reading “event” to mean “outcome” is an archaic usage. The court explained that while whether the Super Bowl happens is an occurrence, who wins it is not.
“Congress did not take a wrecking ball to all sports gambling regulations built up over decades by federal, state, and tribal governments when it amended the (Commodity Exchange Act),” Judge Ryan Nelson said in the ruling. William Durbin, representing Mayes, argued that the Assad decision now controls the circuit. “Assad is now the law of this Circuit. The legal questions at issue in the instant case are the same, and the result must be the same,” Durbin stated.
What’s Next
The 9th Circuit must decide whether to lift the injunction immediately or wait for the en banc rehearing process. A full court review could further clarify the scope of federal preemption over state gambling enforcement actions involving prediction markets.