The U.S. Department of Justice and the Commodity Futures Trading Commission filed a lawsuit on November 12 against the state of Arkansas and Attorney General Tim Griffin. The action aims to stop Arkansas from pursuing its enforcement case against prediction-market operator Kalshi and to bar similar state measures against other federally regulated exchanges.

The complaint was filed in the U.S. District Court for the Eastern District of Arkansas. Federal lawyers contend that the Commodity Exchange Act grants the CFTC exclusive jurisdiction over futures, options, and swaps traded on designated contract markets. They maintain that Kalshi’s event contracts fall within that category and therefore cannot be restricted under state gambling or consumer-protection statutes.

Griffin filed the underlying state lawsuit on November 4 in Independence County Circuit Court against KalshiEX LLC and Kalshi Inc. The 57-page complaint alleges that the platform operates unlicensed gambling on sports, elections, and entertainment events while presenting the activity as lawful financial trading. It further claims Kalshi accepts customers as young as 18, sidesteps state licensing and tax requirements, and misrepresents the legality and risks of its products.

Arkansas seeks an injunction, customer restitution, recovery of alleged unlawful proceeds and unpaid taxes, and civil penalties of up to $10,000 per violation under the Arkansas Deceptive Trade Practices Act, along with an unjust-enrichment claim. None of the requested remedies constitutes a final judgment against the company.

Federal Preemption Argument and Broader Relief Sought

The federal complaint asks the court to declare that Arkansas may not apply its gambling and consumer-protection laws to the disputed transactions on CFTC-regulated platforms. It seeks both preliminary and permanent injunctions covering investigations and enforcement actions against registered markets, their affiliates, and business partners. Kalshi itself is not named as a defendant in the federal case.

Regulators rely on the doctrine of federal preemption, under which federal law overrides conflicting state requirements when Congress has assigned regulatory authority to a federal agency. Arkansas continues to assert that the contracts constitute gambling under state law. No ruling has been issued on the request for injunctive relief.

According to gaming lawyer Daniel Wallach, Arkansas is the eleventh state the CFTC has sued in disputes over prediction-market oversight. Prior actions involved Arizona, Connecticut, Illinois, Kentucky, Minnesota, New Mexico, New York, Rhode Island, Utah, and Wisconsin.

Related State and Federal Litigation

Separate federal challenges were already pending in Arkansas. On November 9, Polymarket US and OG.com, a prediction-market business linked to Crypto.com, each sued Griffin and state gaming officials seeking to block restrictions on their federally regulated event contracts.

The Arkansas developments coincide with parallel activity in Louisiana. On November 12, Louisiana Attorney General Liz Murrill filed suit against Kalshi, Polymarket, and operators associated with Robinhood and Coinbase. A state judge issued a temporary restraining order the same day prohibiting unlicensed event contracts offered to Louisiana residents. The order lasts ten days unless extended, with a preliminary-injunction hearing set for November 30.

Earlier federal litigation includes the CFTC’s October case against Utah seeking comparable protection for regulated exchanges. In New Jersey, a dispute with Kalshi has prompted a state petition for Supreme Court review of a federal appeals decision favorable to the exchange; the justices have not yet decided whether to hear the matter. Separately, a California federal judge on November 4 entered a preliminary injunction limiting Kalshi sports contracts on the lands of two specific tribes.

The current Arkansas lawsuit therefore forms part of a continuing series of federal-state confrontations over the proper regulatory boundary for event contracts offered on CFTC-designated markets.