A federal judge is letting Arizona press ahead with its gambling case against a federally regulated prediction market, rejecting an urgent bid from Kalshi to halt enforcement while the broader legal fight plays out.

In an order dated Wednesday (April 8), U.S. District Judge Michael T. Liburdi pointed to the tension between fast-moving tech and slower-moving regulation, writing that “technology often sprints faster than the law can keep pace.” He denied Kalshi’s requests for both a preliminary injunction and a temporary restraining order, clearing the way for state authorities to continue their case.

Kalshi’s trading platform allows users to buy and sell contracts tied to real-world outcomes such as elections and sports results. The company operates under federal oversight as a designated contract market with the Commodity Futures Trading Commission.

State regulators in Arizona began scrutinizing the company last year, which led to a cease-and-desist letter “requir[ing] that Kalshi cease gambling operations in Arizona.” Officials argue the contracts function as illegal wagers under state law, and prosecutors have since filed criminal charges.

Kalshi, however, has taken its fight to federal court, arguing that the Commodity Exchange Act gives the CFTC “exclusive jurisdiction” over its products. From the company’s perspective, that federal authority overrides any attempt by states to treat its markets as gambling. It asked the court to step in and stop Arizona from enforcing its laws during the case.

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