The Commodity Futures Trading Commission filed a lawsuit against Arkansas on November 13, 2026, seeking to block the state from halting event-contract trading and imposing what the agency says could be hundreds of millions of dollars in civil penalties on CFTC-registered exchanges. The CFTC argues that Arkansas’s civil enforcement action against Kalshi, a CFTC-designated contract market, is preempted by federal law under the Commodity Exchange Act.
CFTC Chairman Michael S. Selig defended the agency's position, saying prediction markets have proved useful for risk management and public information, and that the Commission will not let state interference destroy federally regulated markets. The CFTC noted Arkansas is the 11th state it has sued over the issue, and that it has submitted amicus briefs in four federal Courts of Appeal and one state Supreme Court.
The Arkansas suit is part of a wider legal fight over whether federal commodities rules override state gaming laws for sports and event contracts. Robinhood has separately asked the Supreme Court to decide whether the Commodity Exchange Act preempts state gaming rules, after the Ninth Circuit rejected its request for preliminary protection. Kalshi faces a parallel petition following a Third Circuit ruling favorable to the platform. The Supreme Court has not agreed to hear Robinhood's case, and Nevada's response is due December 7.
Tax exposure adds to the uncertainty. Robinhood has disclosed that it has not collected or remitted the 0.25% federal excise tax on certain authorized wagers because it does not believe its event contracts qualify. The company has warned that adverse tax treatment could be material and potentially make event contracts uneconomical. The immediate legal questions center on regulatory preemption rather than taxation, but a gambling classification could complicate the platforms' tax defenses.
