US Justice Department and CFTC Sue Arkansas to Block Its Enforcement Action Against Kalshi

Published November 13, 2026, 4:37 PM PKT. Based on reporting from The Block on November 13, 2026, the federal complaint filed in the US District Court for the Eastern District of Arkansas (primary source), and CoinCentral on November 13, 2026 (secondary source).

The US Department of Justice and the Commodity Futures Trading Commission sued Arkansas on Thursday, November 12, 2026, asking a federal court to block the state's enforcement action against prediction market Kalshi and to declare that state gambling laws cannot be enforced against federally regulated prediction markets. It is the first time the Justice Department has joined the CFTC in suing a state in the escalating fight over who regulates event contracts, and it comes a day after Louisiana sued 10 prediction market operators in the same dispute.

The lawsuit, filed in the US District Court for the Eastern District of Arkansas, names the State of Arkansas and Attorney General Tim Griffin, acting in his official capacity. The federal agencies argue that the Commodity Exchange Act gives the CFTC exclusive jurisdiction over commodity futures, options and swaps traded on regulated platforms such as Kalshi, and that the event contracts Arkansas targeted are swaps under the Act. The state's efforts to stop a CFTC-regulated platform from offering those contracts intrude on the exclusive federal scheme, the complaint says, according to The Block.

The Justice Department and the CFTC are asking the court for preliminary and permanent injunctive relief, and for a declaration that Arkansas law is preempted by federal law and cannot be enforced against CFTC-regulated prediction market platforms. The protection the government seeks reaches beyond Kalshi to other federally regulated exchanges and their business partners, according to CoinCentral. Kalshi itself is not a defendant in the new federal case.

Arkansas sued Kalshi first, on November 4

The federal suit answers a lawsuit Griffin filed on November 4 against KalshiEX LLC and Kalshi Inc., alleging that Kalshi operated an illegal gambling platform in Arkansas. Griffin said the platform let users wager on the outcome of just about anything, and that such gambling is squarely prohibited by Arkansas law. The state brought the case under the Arkansas Deceptive Trade Practices Act, seeking restitution, civil penalties, unpaid taxes and an injunction.

The Arkansas complaint said Kalshi let residents as young as 18 place money on sports, elections and entertainment, and cited the platform's self-exclusion tools, deposit limits and trading breaks as evidence that the business functions like a gambling operator. Griffin filed a separate lawsuit the same day against VGW, the sweepstakes operator behind Chumba Casino, under the same consumer protection law. The Block has reached out to Kalshi and Griffin's office for comment on the federal suit.

The federal case: exclusive jurisdiction over swaps

The core of the federal argument is a single sentence in the Commodity Exchange Act: the CFTC has exclusive jurisdiction over swaps traded on a registered exchange. The agencies say Kalshi's event contracts are swaps, so a state cannot use its gambling laws to shut them down. The CFTC advanced the same jurisdictional claim in earlier lawsuits against states, including Utah, according to CoinCentral.

The argument has already divided the federal appeals courts. The Third Circuit sided with Kalshi in New Jersey in April 2026, while the Ninth Circuit ruled in August that Kalshi's sports contracts were not swaps because they were sports bets, and on November 4 it refused to rehear the case. The Second Circuit denied Kalshi and Coinbase injunctions while their New York and Connecticut appeals run. New Jersey has asked the Supreme Court to decide whether the 2010 Dodd-Frank Act stops states from regulating sports bets offered on CFTC-registered markets, and Kalshi has until December 7 to respond to that petition and until February 2, 2027 to seek review of the Ninth Circuit ruling.

The CFTC has moved aggressively to settle the question by rule as well as by lawsuit. On October 9 it proposed classifying some event contracts as swaps, and an interim final rule to that effect took hold on October 19. Comments on the proposal close on November 18, and on November 20 a federal judge hears the agency's bid to halt Utah's cases.

A week of state action: Louisiana, Utah and the tribes

The Arkansas suit is one front in a state-by-state campaign that accelerated this week. On November 12, Louisiana Attorney General Liz Murrill sued 10 prediction market operators, including Kalshi, Polymarket, Robinhood, Coinbase and Gemini, calling their event contracts illegal online gambling and seeking an immediate restraining order. A judge in Tangipahoa Parish signed a 10-day temporary order the same afternoon, and Kalshi answered by asking a federal court for emergency protection. A hearing on a longer injunction is set for November 30. The site reported the Louisiana suit on November 13.

The CFTC sued Utah on October 27, the tenth state it has taken to court over prediction markets, and said it had started proceedings against nine other states. On November 5 the commission told every federally registered exchange to stop blocking traders by state within 30 days, or explain in writing why it cannot, reading its impartial-access rule as barring any refusal based on a trader's state of residence. The 30 days run out on December 5, and Kalshi cannot comply without defying court orders in states where it is already barred.

Last week a federal judge granted a preliminary injunction barring Kalshi from offering sports-event contracts on the lands of two California tribes, Blue Lake Rancheria and the Chicken Ranch Rancheria of Me-Wuk Indians. A Kalshi spokesperson said the company had voluntarily withdrawn its services from the tribes' lands in September.

The criticism, and what comes next

The federal intervention has drawn sharp criticism from lawmakers who see the CFTC taking Kalshi's side after years of policing it. Senator Adam Schiff, a California Democrat on the committee that oversees the agency, said the CFTC and its chairman now appear to be encouraging platforms to continue offering gambling products in contempt of court orders. Until a court settles the preemption question, both sides get to claim the law is on their side, the debate's participants have noted.

What happens next turns on the courts and the calendar. The Eastern District of Arkansas has not yet ruled on the federal request for preliminary relief. The CFTC's swap classification proposal closes for comment on November 18, the Utah hearing falls on November 20, the CFTC's 30-day geoblock deadline expires on December 5, Kalshi must answer New Jersey's Supreme Court petition by December 7, and the Louisiana injunction hearing is set for November 30. Each date moves the same question closer to an answer: whether event contracts are state-regulated gambling or federally regulated swaps.

Sources

• US Department of Justice and Commodity Futures Trading Commission, Complaint, USA v. Arkansas, US District Court for the Eastern District of Arkansas, November 12, 2026 (primary source: the federal complaint against the State of Arkansas and Attorney General Tim Griffin, arguing the Commodity Exchange Act gives the CFTC exclusive jurisdiction over swaps traded on regulated platforms and seeking preliminary and permanent injunctive relief)
• The Block, DOJ, CFTC sue Arkansas to block state enforcement action against Kalshi, November 13, 2026 (secondary source: the Justice Department and the CFTC filed suit on Thursday in the US District Court for the Eastern District of Arkansas, arguing the Commodity Exchange Act gives the CFTC exclusive jurisdiction over commodity futures, options and swaps traded on regulated platforms such as Kalshi; Griffin sued Kalshi on November 4, alleging it operated an illegal gambling platform; the agencies seek preliminary and permanent injunctive relief)
• CoinCentral, DOJ and CFTC Challenge Arkansas Over Kalshi Enforcement, November 13, 2026 (secondary source: the federal lawsuit names Arkansas and Attorney General Tim Griffin in his official capacity, was filed in the US District Court for the Eastern District of Arkansas, and seeks protection reaching other CFTC-regulated exchanges and their partners; the CFTC advanced similar jurisdictional claims in earlier lawsuits against states, including Utah; the CFTC published an interpretation of its impartial-access requirements on November 5)
• Particle News, Arkansas Sues Kalshi, Accusing Prediction Market of Unlicensed Sports Betting, November 5, 2026 (secondary source: Griffin filed suit on November 4 seeking restitution, civil penalties, unpaid taxes and injunctions after alleging Kalshi operated an unlicensed gambling platform; the complaint says Kalshi let residents as young as 18 place money on sports, elections and entertainment)

This article is news reporting and is not investment advice.