DOJ and CFTC Sue Arkansas to Halt Kalshi Enforcement Action

Exclusive Jurisdiction Claim Under the Commodity Exchange Act

The US Department of Justice and the Commodity Futures Trading Commission (CFTC) sued Arkansas on Thursday, November 12, asking a federal court to halt the state's enforcement action against prediction market platform Kalshi. The complaint was filed in the US District Court for the Eastern District of Arkansas and names state Attorney General Tim Griffin as the defendant. Both agencies request preliminary and permanent injunctions that would stop Arkansas's current enforcement push and block comparable state interventions against CFTC-supervised prediction markets in the future.

At the center of the filing is a jurisdictional question: which authority governs event contracts traded on prediction markets. The government argues that certain contracts Kalshi offers fall under the Commodity Exchange Act, the federal statute granting the CFTC exclusive jurisdiction over futures, options and swap transactions on regulated platforms. The complaint classifies the targeted event contracts as swaps and contends that a state blocking a CFTC-registered platform from offering those products intrudes on an exclusively federal regime. Under that reading, federal law preempts the Arkansas statutes the state has invoked.

The litigation began on November 4, when Griffin sued Kalshi and accused the platform of running an illegal gambling business by letting users bet on the outcome of nearly any event. Griffin characterized such wagering as expressly prohibited under Arkansas law. The federal suit is structured unusually: the United States itself is the plaintiff and the state is the defendant, rather than the platform fighting enforcement on its own. The complaint is a request, not a ruling, and the court still has to decide whether the agencies' preemption argument stands; the full text is available in the public court docket.

Louisiana Names Kalshi, Polymarket, Robinhood and Coinbase

The federal filing lands while state-level pressure on prediction markets widens. On the same November 12 date, Louisiana Attorney General Liz Murrill sued Kalshi, Polymarket, Robinhood and Coinbase, among other companies, arguing that the platforms violate Louisiana law and asking for immediate restraining orders and injunctions to restrict their activity in the state. Louisiana's approach mirrors Arkansas's: it treats the same products as gambling and asks state courts to shut them down.

In California, a federal judge issued a preliminary injunction last week blocking Kalshi from offering contracts tied to sports events on land belonging to two Native American tribes. Kalshi says it had already voluntarily suspended service in those areas in September, before the order issued.

For Kalshi, the underlying dispute is identical across states. The platform lets users trade contracts on real-world event outcomes and operates federally as a prediction market under CFTC oversight, and the core fight is whether federally regulated event contracts can additionally be restricted under state gambling statutes. The Commodity Exchange Act route chosen in Arkansas is one answer to that question. The CFTC has also defended its regulatory perimeter in separate litigation, asserting authority over leveraged US equity perpetual contracts in a case where Coinbase and Kalshi supported the agency's position. Regulatory scrutiny of prediction markets has surfaced in several states within weeks, first with Arkansas on November 4, then Louisiana eight days later.

What the Arkansas Ruling Would Settle

The Arkansas case is now the clearest test of whether prediction market regulation belongs to Washington or the states. The Justice Department and the CFTC chose preemption litigation over a negotiated settlement, which suggests the agencies want a ruling that binds beyond a single state. If the court agrees that event contracts are swaps with exclusive federal oversight, CFTC-regulated platforms gain a durable shield against state gambling claims. A ruling the other way leaves the state patchwork in place and invites more suits like Louisiana's. The digital asset sector holds a secondary exposure here: blockchain-linked prediction platforms such as Polymarket sit inside the same debate, and whatever boundary the court fixes would apply to them as well.