CFTC Sues Arkansas Over Its Kalshi Case, Its Second Suit in the Eighth Circuit

The federal government has asked a Little Rock court to stop Arkansas suing Kalshi and to bar the state from even investigating CFTC-regulated exchanges. Its complaint asks for a preliminary injunction, but no motion for one had reached the docket by the end of 12 November.

• The United States and the Commodity Futures Trading Commission (CFTC) sued the State of Arkansas and Attorney General Tim Griffin in the Eastern District of Arkansas on 12 November
• The suit targets Arkansas' 4 November consumer protection case against Kalshi in Independence County Circuit Court, which the CFTC says the Commodity Exchange Act pre-empts
• It pleads one Supremacy Clause count and asks for a declaration plus preliminary and permanent injunctions covering Arkansas law, investigations included
• The complaint warns that per-violation penalties could reach hundreds of millions of dollars, against fees of $0.07 to $2.63 per 100 contracts
• It lists pre-emption actions in 10 other states, including Utah, where a hearing on the CFTC's injunction motion is set for 20 November

Washington Asks a Federal Court to Stop Arkansas' Kalshi Case

The complaint in United States v. Arkansas (No. 4:26-cv-01255) was filed in the Central Division of the Eastern District on 12 November, although its signature page is dated 10 November. The CourtListener docket shows it assigned to District Judge Brian S. Miller. It is signed for the CFTC by Senior Assistant General Counsel David W. Rubin, under General Counsel Tyler S. Badgley, and for the United States by Timothy J. Borgerson of the Justice Department.

The target is State of Arkansas v. KalshiEX LLC (No. 32CV-26-717), which Griffin filed on 4 November under the Arkansas Deceptive Trade Practices Act (ADTPA) with an unjust enrichment claim. The CFTC alleges that the event contracts Arkansas challenges are swaps, that Kalshi is a designated contract market (DCM) within its "exclusive jurisdiction", and that Arkansas law is pre-empted expressly, by occupation of the field and by conflict. Kalshi is described as a non-party.

The prayer asks the court to declare Arkansas law invalid as applied to transactions on CFTC-regulated DCMs, and to bar the state from "investigating CFTC-regulated entities and their affiliates and partners" or enforcing state law against those transactions. It says "preliminary injunctive relief is required to preserve the status quo". These are allegations; Arkansas has not responded.

Penalties, Geofencing and the Other Exchanges

The complaint notes that the ADTPA allows civil penalties of up to $10,000 per violation, while Kalshi earns between $0.07 and $2.63 in fees per 100 contracts on most contracts. Penalties assessed per violation would "dwarf" Kalshi's Arkansas income and "could reach the hundreds of millions of dollars", it argues. It also cites the CFTC's 5 November interpretation of its impartial access rule, saying Arkansas would force exchanges to breach it by turning away the state's residents.

The complaint says 30 exchanges hold active DCM designations and names Nadex and CME Group as longstanding ones. It does not mention that Polymarket US and OG.com, whose legal name is North American Derivatives Exchange, sued Griffin on 9 November. On CourtListener, neither of those dockets showed a motion for interim relief by 10 November, and no federal suit by Kalshi against Arkansas appears.

The CFTC Is Moving Faster in Utah Than in Arkansas

In Utah, the CFTC filed its complaint on 26 October and moved for a restraining order and preliminary injunction three days later, attaching Utah's criminal charges against Kalshi. Utah filed its opposition on 11 November, the court consolidated the case with OG.com's the next day, and Judge Robert J. Shelby, who ruled for Utah against Kalshi in August, will hear the motion on 20 November. In Arkansas the docket held only the complaint and civil cover sheet at the end of 12 November.

The Complaint Cites Its Wins and Leaves Out Its Losses

The complaint lists 10 states, though for Rhode Island it cites Kalshi's own case rather than a federal suit, and says courts have granted preliminary injunctions for the federal side in Arizona, Illinois and Minnesota. It notes that an appeal is pending in Wisconsin, without saying that Judge William C. Griesbach denied the CFTC's injunction motion there in July, finding no likely success or irreparable harm and writing that the exchanges would be the proper plaintiffs. It does not mention Shelby's August ruling for Utah.

Minnesota Is the Precedent That Matters

Arkansas sits in the Eighth Circuit, as does Minnesota, where the complaint says the CFTC won a preliminary injunction on 27 July. It also relies on a 2024 Eighth Circuit decision, United States v. Missouri, for the federal government's right to sue a state in equity. Polymarket US and OG.com are suing in Arkansas, Kalshi, Robinhood and others in Missouri, and Kalshi's Iowa appeal had not been decided as of 11 November, so the Eighth Circuit will face the question from several directions. Its eventual answer will bind Judge Miller in a way that no ruling from Utah or Wisconsin can.

The CFTC has now joined the exchanges in suing Arkansas, but has not yet asked for the urgent relief it sought in Utah. Until a federal court rules, the Independence County case against Kalshi continues.