US and CFTC sue Arkansas to stop its enforcement action against Kalshi

The United States and the Commodity Futures Trading Commission (CFTC) sued the State of Arkansas and its attorney general, Tim Griffin, on Thursday, November 12, 2026, asking a federal court to stop the state's enforcement action against the prediction market Kalshi. The complaint was filed in the US District Court for the Eastern District of Arkansas.

What the federal government is asking for

A prediction market lets users trade contracts that pay out depending on whether an event happens, such as the result of a game or an election. Kalshi is registered with the CFTC as a designated contract market, the legal term for a federally regulated derivatives exchange.

The complaint says the Commodity Exchange Act gives the CFTC "exclusive jurisdiction" over futures, options and swaps traded on such exchanges. It argues that the event contracts Arkansas is targeting are swaps, a type of derivative contract, under that law, so a state cannot regulate or ban them.

The government asks for three things: a judgment that Arkansas law is preempted as applied to transactions on CFTC-regulated exchanges, a preliminary and permanent injunction, meaning a court order that stops the state from acting, and its costs. The injunction would bar the state from enforcing its law against those transactions and from investigating CFTC-regulated entities "and their affiliates and partners."

The request therefore reaches beyond the one case against Kalshi. The complaint says "any future enforcement actions or investigations" against federally regulated exchanges and related entities should be stopped as well.

What Arkansas alleges against Kalshi

Arkansas filed its case on November 4 in the Circuit Court of Independence County against Kalshi Inc. and KalshiEX LLC. We did not read the state's complaint; the federal filing quotes it. According to those quotes, the state says Kalshi "in large part, is a straightforward gambling platform," that consumers use the contracts to "risk money on the outcome of an athletic contest" and that this "is sports betting." These are the state's allegations; the federal complaint disputes them and argues that the contracts are swaps under federal law.

The state seeks an injunction, the return of money to consumers and civil penalties under the Arkansas Deceptive Trade Practices Act, the federal complaint says. That law allows penalties of up to $10,000 per violation, according to the complaint. The federal government argues that penalties counted per violation "could reach the hundreds of millions of dollars."

Kalshi is not a party to the federal case. The Block reported that it had asked Kalshi and Griffin's office for comment.

Why it matters

The case is part of a wider fight over who regulates prediction markets. The complaint lists courts that have blocked states from applying gambling laws to CFTC-regulated exchanges, including the US Court of Appeals for the Third Circuit.

Not every court has agreed. On November 10, a federal judge in New York refused to block that state's gambling law in a case brought by the sports prediction platform Novig, and said its sports contracts are not swaps, according to The Block. That ruling was about one company's sports contracts under New York law, so the two cases are not identical.

States are still filing cases. On November 12, Louisiana sued Kalshi, Robinhood and eight other platforms, the state's attorney general said. Another federal case against Griffin, brought by North American Derivatives Exchange, was filed in the same court on November 9, court records show. We have not read that complaint. The CFTC is bringing its case with one sitting member; President Donald Trump named two nominees for the agency's empty seats on November 12.

What it could mean for traders

Nothing changes for users until a court rules. The federal case was assigned to Judge Brian S. Miller, and the docket listed only the complaint on November 13.

The outcome matters most to people in Arkansas who use Kalshi or similar platforms. If the court grants the injunction, the state could not enforce its law against contracts on CFTC-regulated exchanges while the case continues. If it refuses, the state's case against Kalshi goes on. In our assessment, the split between courts makes it likely that higher courts will have to settle the question.