Arizona is seeking to postpone further hearings in its case against Kalshi, citing a potential pending ruling in the Ninth Circuit in Nevada’s consolidated case against prediction market platforms.
Arizona officials are asking a federal court to delay the next hearing in their litigation with prediction market operator Kalshi, as the case increasingly hinges on a pending Ninth Circuit appellate ruling that could be significant for the ongoing classification and regulation of event-based contracts.
In a joint status report filed Monday, the State of Arizona requested that the upcoming May 6 hearing on a preliminary injunction be postponed to June 3 or later. All parties have agreed to extend the current temporary restraining order (TRO) in the meantime.
Arizona Seeks More Time to Develop Record
Arizona said it needs additional factual development and briefing to aid the court in deciding on a preliminary injunction.
State attorneys argued that delaying the hearing would allow the parties to “develop and brief additional issues.” That includes standing, the classification of event contracts, and the potential “financial, economic, [and] commercial consequences” associated with such markets.
The state also indicated it may introduce witness testimony and pursue limited discovery. It stated it “anticipate[s] offering witness testimony” and “propounding limited, targeted written discovery” to build a more comprehensive evidentiary record.
Federal Government and Kalshi Urge Preliminary Injunction
The Commodity Futures Trading Commission (CFTC), which intervened in the case in support of Kalshi, reiterated that it believes additional briefing is unnecessary. It noted the court has received extensive arguments from all parties.
Instead, the agency has urged the court to issue a preliminary injunction and a stay, especially as it anticipates the Ninth Circuit issuing a ruling that could clarify preemption arguments.
Kalshi has aligned with the CFTC, stating that it does not think additional briefing is necessary.
Ninth Circuit Signals Add Weight to Delay
All parties have acknowledged that the United States Court of Appeals for the Ninth Circuit could issue a decision in consolidated Nevada cases, which could directly influence the Arizona case.
Arizona’s request to delay comes as the appellate court has signaled skepticism toward sports event contracts. During the April 16 hearing, judges questioned whether sports-based event contracts are meaningfully different from traditional betting and whether federal law can override state gambling regulation.
U.S. Circuit Judge Ryan Nelson questioned the distinction arguments by prediction markets. He called it “sophistry to the nth degree… it’s still the house.” The panel also showed skepticism toward the industry’s argument that such products fall outside gambling frameworks.
Arizona’s filing notes that a Ninth Circuit ruling could “bind the Court’s evaluation” of the case or potentially render further proceedings unnecessary.
Dispute Continues Over Scope of TRO
Arizona has also asked the court to clarify the scope of the existing TRO, which currently blocks Arizona from enforcing its gambling laws against Kalshi’s event contracts.
State officials said they understand the order prevents the filing of new enforcement actions or the pursuit of any already-filed actions enforcing Arizona state laws. However, they argue that the TRO allows them to investigate possible violations of state law, including by issuing subpoenas. The filing states:
“In other words, Defendants have the same ability to investigate as they did prior to the TRO, but they must hold short of filing any cases based on any such investigations. Defendants
respectfully request the Court confirm that their understanding is correct.”
Federal regulators and Kalshi rejected that interpretation. They warned that such actions would impose “significant harm” and interfere with federal oversight of derivatives markets.
The post Arizona Seeks to Delay Kalshi Case as Ninth Circuit Decision Looms appeared first on Gambling Insider.
