US Justice Department and CFTC Sue Arkansas

The US Department of Justice (DOJ) and the Commodity Futures Trading Commission (CFTC) have filed a lawsuit in federal court against the state of Arkansas. The case was opened on November 12 in the US District Court for the Eastern District of Arkansas. The defendants include the state and Attorney General Tim Griffin.

According to the complaint, the Commodity Exchange Act gives the CFTC exclusive authority over derivatives traded on designated contract markets. The agencies want the state barred from applying its gambling and consumer protection laws to these transactions. The demands are not limited to Kalshi. Other CFTC-registered exchanges, affiliated companies and business partners are also sought to be covered.

On November 4, Griffin had filed a lawsuit against Kalshi and Virtual Gaming Worlds (VGW). The companies are accused of offering illegal gambling in the state and misleading consumers about whether their products are legal. Griffin is seeking compensation for affected customers, civil penalties and the collection of unpaid taxes. He also asks that the two companies be prevented from commercializing their products.

Griffin argues that Kalshi's event contracts are gambling products rather than financial forecasting tools. He bases this claim on features such as self-exclusion options, deposit limits and gambling addiction resources. He notes that these features are generally associated with gambling operators.