Prediction market platform Kalshi received a boost in its legal battle in Arizona with a favorable judge appointed to its case against the state’s gambling regulator.
The company filed a lawsuit against the Arizona Department of Gaming (ADG) last week, and the case was originally assigned to Mormon Judge David G. Campbell. Campbell, however, recused himself, as did the next assigned judge, James A. Teilborg.
The case has now been assigned to Judge Michael T. Liburdi, a Trump appointee and a former partner at Snell & Wilmer, the law firm representing Kalshi.
Trump has been an advocate for prediction markets, with his social media platform, Truth Social, partnering with Crypto.com. His son, Donald Trump, Jr. is also an advisor to both Kalshi and Polymarket.
Liburdi is therefore likely to be far more accommodating to Kalshi’s arguments than Campbell or Teilborg. While reporting the appointment, legal expert Daniel Wallach said on X, “Kalshi wins the judicial wheel of fortune in Arizona.”
Kalshi Requests Injunction From Judge
Kalshi filed its lawsuit against the ADG and Arizona’s Attorney General on Friday. The action came after the ADG issued the company a cease-and-desist order in May last year.
The lawsuit aims to prevent the state from enforcing this, with the lawsuit stating, “The Motion requests that the Court temporarily restrain and preliminarily enjoin the State of Arizona’s intrusion into the federal government’s exclusive authority to regulate derivatives trading on exchanges overseen by the Commodity Futures Trading Commission (“CFTC”).”
The ADG also sent cease-and-desist orders to Robinhood and Crypto.com last year. The latter exited the state in December and has also withdrawn from eight other states.
In addition to targeting prediction market platforms, Arizona has warned licensed sportsbooks about doing business with operators. It has threatened to revoke Underdog’s license over its partnership with Crypto.com.
Kalshi, however, appears to have no intention of stepping back in any state. The company also filed a lawsuit against Iown this week and is now locked in legal battles in 19 different states.
The majority of these are against state regulators, while some lawsuits have been brought against Kalshi by users who allege it is operating an illegal gambling platform.
Supreme Court Ruling May Be Required
In several states, including Ohio, Connecticut, Maryland, Massachusetts, and New York, judges have rejected Kalshi’s requests for injunctions against state regulators. Kalshi has appealed the rulings, and the judges have agreed to withhold any enforcement action pending the appeals.
Lawyer Andrew Kim, who has followed the litigation involving prediction markets, said he believes a Supreme Court decision may be necessary to settle the disputes.
This, however, could take several years. Speaking at an event last week, Kim stated, “We could conceivably get a decision as soon as the next year and a half … [but] it could be much further down – it could be 2029, and so I think a lot of this depends on what the courts of appeals decide.”
In the meantime, Kalshi and other platforms continue to expand their range of sports markets, including extensive esports betting. Kalshi has said its esports markets have generated almost $2 billion in trading volume, although this figure is disputed by rival platform Polymarket.