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Can states ban Kalshi election markets? There is no final nationwide answer in the cases described here. The dispute is whether federal derivatives law protects event contracts traded on a federally registered designated contract market from state gambling laws, or whether states may regulate or prosecute some of those offerings as unlawful wagering. The CFTC argues federal law gives it exclusive jurisdiction over covered contracts; state officials argue that some Kalshi markets violate state law. Courts have not settled the question for every contract type or state.
Why Kalshi and the states disagree
Kalshi offers event contracts whose value depends on real-world outcomes, including elections and sports. The legal question is not simply whether a contract looks like a bet. It is whether the contract falls under federal derivatives law in a way that displaces state gambling rules, and how that answer changes with the contract and the state involved.
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- The CFTC’s position: The Commodity Futures Trading Commission says Congress assigned it exclusive jurisdiction over covered derivatives traded on designated contract markets. It argues that states cannot enforce conflicting gambling laws against those contracts.
- The states’ position: State officials have alleged that particular offerings amount to unlawful gambling, sports betting, or election wagering under their laws. Those allegations and enforcement actions are not themselves court decisions establishing that every Kalshi contract is illegal.
The CFTC’s claims about federal authority are the agency’s litigating position, not a final judicial determination governing all event contracts. The cases differ by forum, state law, and contract type.
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Arizona has alleged illegal election wagering
On March 17, 2026, Arizona Attorney General Kris Mayes announced a 20-count criminal information against KalshiEx LLC and Kalshi Trading LLC. The state alleged unlicensed gambling and election wagering. Four election-related counts concerned contracts tied to the 2028 presidential race, the 2026 Arizona gubernatorial race, the 2026 Republican gubernatorial primary, and the 2026 Secretary of State race. These are allegations in the Attorney General’s announcement, not proof of guilt or a reported conviction. Read the Arizona Attorney General’s announcement.
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Mayes said, “No company gets to decide for itself which laws to follow.” The announcement does not establish the case’s later disposition.
The CFTC has challenged state enforcement in federal court
Wisconsin
On April 28, 2026, the CFTC said Wisconsin had filed civil suits against Kalshi, Polymarket, Crypto.com, Robinhood, and Coinbase, asserting felony violations of state law. The commission then sued Wisconsin, arguing that federal law gives it exclusive jurisdiction over covered derivatives, including event contracts traded on designated contract markets. Chairman Michael S. Selig said, “States cannot circumvent the clear directive of Congress.” That is the CFTC’s argument in the dispute, not a ruling that resolves the scope of federal authority for every contract. Read the CFTC’s Wisconsin announcement.
New Mexico and other reported disputes
On June 12, 2026, the CFTC said New Mexico had sued Kalshi in state court the prior week, alleging unlawful online sports betting. The commission said it filed a federal case against New Mexico seeking declaratory relief and an injunction against enforcement it considers preempted by federal law. Its announcement also listed litigation involving Arizona, Connecticut, Illinois, New York, Minnesota, Rhode Island, and Wisconsin. That is the list the CFTC reported on that date, not a guarantee that it is exhaustive or unchanged since. Read the CFTC’s New Mexico announcement.
What the Ninth Circuit decided—and what it did not
In KalshiEX, LLC v. Assad, No. 25-7516, the Ninth Circuit ruled on August 28, 2026, in the Nevada dispute. Its appellate decision concerned Kalshi’s sports-related event contracts: it concluded Kalshi had not shown a likelihood that the Commodity Exchange Act preempts Nevada gaming rules as applied to those sports contracts. The court affirmed in part the dissolution of a preliminary injunction that had protected Kalshi from Nevada gaming regulation.
The court remanded for further consideration of Nevada’s challenges to Kalshi’s election contracts. It did not decide the legality of those contracts in that appeal. Nor was the ruling a final nationwide decision on election markets; it concerned an interlocutory injunction in a Nevada case. Read the Ninth Circuit opinion.
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The present disputes follow an earlier fight over election-related derivatives. The CFTC issued an order in 2023 barring certain Kalshi contracts on which party would control Congress. In September 2024, a federal district court granted summary judgment to Kalshi and vacated that order. The CFTC dismissed its appeal on its own motion in May 2025.
That litigation history is separate from the current state cases and the commission’s ongoing rulemaking. The CFTC withdrew a 2024 proposed event-contract rule in February 2026, then published an advance notice of proposed rulemaking on prediction markets in March. The comment period closed April 30, 2026. The Federal Register reported approximately 3,500 submissions, of which about 300 included detailed comments and recommendations; those are submissions to the agency process, not measures of public opinion, market participation, or trading volume. Read the Federal Register notice.
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Fix the driver behind crashes, sound loss and screen glitchesFind Drivers →Repair Windows errors before they cause bigger problemsFix Now →In recounting its earlier order, the commission cited concerns that political contracts could affect election integrity or perceptions of it, be manipulated, or incentivize misinformation. Those were agency concerns, not established findings that Kalshi contracts caused those effects. The Federal Register quotes the commission as saying the contracts “could potentially be used in ways that would have an adverse effect on the integrity of elections, or the perception of integrity of elections.”
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How to read the legal status by contract and forum
| Issue | What the cited developments establish | What remains unresolved |
|---|---|---|
| Arizona election contracts | The Attorney General announced criminal allegations concerning four election-related markets in March 2026. | The announcement does not establish guilt or the case’s later disposition. |
| Nevada sports contracts | The Ninth Circuit’s August 2026 ruling concerned sports contracts and the preliminary-injunction posture. | It does not decide the legality of election contracts or settle the question nationwide. |
| Nevada election contracts | The Ninth Circuit remanded the state’s challenges for further consideration. | The cited opinion does not report the final result of that remand. |
| Federal preemption | The CFTC has sued states and argued federal law displaces enforcement against covered contracts. | The CFTC’s position has not produced a final answer for every state and contract type. |
| Federal rulemaking | The CFTC’s prediction-market advance notice received comments and recommendations. | The cited materials do not establish a final rule. |
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