Kalshi and Arizona gaming regulators want the Ninth Circuit to slow down an appeal that could help define how far federal commodities law reaches into state gambling enforcement. In a joint filing submitted May 27, both sides asked the court to pause briefing while several related appeals already pending before the same circuit are decided.
The request follows oral arguments heard in April involving Kalshi, Robinhood Derivatives and North American Derivatives Exchange. These focus on whether the Commodity Exchange Act gives the Commodity Futures Trading Commission exclusive authority over event contracts offered through federally regulated exchanges.
The parties told the court that any pending appeals “could bear on the questions at issue in this appeal” and argued that waiting for decisions would help produce briefs “that will be most useful to the Court.”
Under the current schedule, Kalshi’s opening brief is due June 8. The proposed pause would keep briefing on hold until 30 days after rulings arrive in KalshiEX, LLC v. Assad, North American Derivatives Exchange, Inc. v. Nevada, and Robinhood Derivatives, LLC v. Dreitzer.
Federal and state conflict intensifies as Kalshi and Arizona regulators’ case is heard in the Ninth Circuit
On May 21, 2025, the Arizona Department of Gaming sent Kalshi a cease-and-desist letter. Regulators claimed the company was illegally offering “event wagering” without “licensure and compliance with Arizona statutes and regulations.”
Kalshi responded by filing suit in federal court on March 12, 2026, against Arizona gaming director Jackie Johnson and Attorney General Kristin Mayes. The company argued that federal law preempts Arizona from regulating contracts traded on federally approved Designated Contract Markets.
Days later, Kalshi sought emergency relief through a temporary restraining order and preliminary injunction. Arizona then filed a criminal information against the company in state court the same day.
The legal fight widened further when the Commodity Futures Trading Commission and the United States filed their own federal lawsuit on April 2. Federal lawyers asked the court to block Arizona from enforcing “state laws pertaining to gambling or wagering” against “CFTC-Designated” exchanges such as Kalshi.
A federal judge later denied Kalshi’s separate request for a preliminary injunction, ruling that the Anti-Injunction Act prevented the court from stopping the ongoing state prosecution. Still, the judge also concluded that federal involvement “forecloses Younger abstention.”
Weeks later, the same court granted a preliminary injunction requested by the federal government. The judge determined federal authorities were likely to succeed on their preemption argument and blocked Arizona’s criminal case from moving forward while litigation continues.
Arizona now has until July 6, 2026 to appeal that ruling.
In the latest filing, both sides argued that pausing the current appeal would promote efficiency while avoiding overlapping arguments. They also indicated that if Arizona challenges the federal injunction, they may ask the Ninth Circuit to coordinate both appeals together.
Featured image: Kalshi / Canva
