A legal fight unfolding in Wisconsin over prediction market trading is now drawing in a fresh federal ruling from Arizona, as Kalshi presses its argument that federal regulators, not states or tribal governments, control the space.
In a filing dated Monday (April 13), Kalshi and an affiliate pointed to the U.S. District Court for the Western District of Wisconsin to a recent Arizona decision they say strengthens their case. At the center of the dispute is whether federal law blocks local efforts to regulate trading on platforms known as designated contract markets.
The Arizona case involved the Commodity Futures Trading Commission securing a temporary restraining order that halted state-level enforcement actions against those federally regulated platforms. It follows a push by federal regulators to assert authority over prediction markets, as similar disputes continue to surface across the country.
Arizona ruling adds weight to Kalshi federal preemption argument against Ho-Chunk Nation in Wisconsin
Kalshi told the Wisconsin court that the Arizona decision goes straight to the core legal question: whether the Commodity Exchange Act gives the CFTC exclusive control over trading on these markets.
Quoting directly from the filing, the defendants said the Arizona court issued an order “prohibiting any state enforcement efforts against CFTC-regulated designated contract markets (‘DCMs’) on the grounds that state gambling laws are preempted as applied to transactions on DCMs.”
They added that the development “directly bears on whether the Commodity Exchange Act’s grant of exclusive jurisdiction to the CFTC leaves any room for state or tribal regulation of trading on DCMs.”
Kalshi is now urging the Wisconsin judge to apply similar reasoning. The Ho-Chunk Nation has challenged the company’s contracts, arguing they resemble sports betting and fall under tribal authority as well as the Indian Gaming Regulatory Act. The tribe has also moved to block Kalshi from offering contracts while the lawsuit plays out.
Kalshi has pushed back by asking the court to dismiss what it calls an overly sweeping case. The company argues that geography should not dictate legality, maintaining that federally regulated markets operate nationwide and fall squarely under the CFTC’s jurisdiction.
Regulators and industry participants remain split on whether these event-based contracts belong under commodities law or should be treated as gambling.
Featured image: Kalshi / Ho-Chunk Nation
