Hearing follows judge change in Underdog lawsuit against Washington authorities and Arizona officials asking the Ninth Circuit to lift their injunction.
Counsel representing the United States Commodity Futures Trading Commission toed the company line during a hearing at the US District Court for the Southern District of New York on Monday. The presiding judge was skeptical about whether that argument is sufficient to grant the commission’s request to block New York authorities from moving forward with their efforts to enforce the state’s gambling laws against prediction market exchange operators, though.
On the other side of the US, Arizona officials are trying to capitalize on the moment before the Ninth Circuit Court of Appeals. There has also been a change in Underdog’s lawsuit against Washington Attorney General Nick Brown.
CFTC arguments meet skepticism from federal judge
The US Commodity Futures Trading Commission (CFTC) made its case for US District Judge Lorna G. Schofield to grant its request for a preliminary injunction against New York officials on Sept. 14, 2026. According to Alyssa Aquino of Law.com, Schofield’s questioning signaled that it wasn’t a slam dunk argument.
Counsel for the CFTC framed its pleas around federal law giving the agency exclusive jurisdiction over event contract trading. However, Aquino reports that Schofield responded by asking counsel why an injunction is warranted when numerous courts across the US have found fault with that very premise.
The CFTC sued New York in April and the requested injunction would be in effect while that case is ongoing. The injunction would have several impacts if granted.
New York Attorney General Letitia James has sued Kalshi, arguing that the exchange is violating the state’s laws by offering event contract trading on cultural, political, and sports events. Additionally, the New York State Gaming Commission has issued cease-and-desist orders to other exchange operators.
Judges with the Southern District of New York (SDNY) other than Schofield have already denied similar requests, including a motion for a temporary restraining order the CFTC made after James filed her lawsuit. Whether Schofield will grant the injunction or not isn’t the only pending result in a lawsuit between the CFTC and state government figures.
Arizona gaming regulator asks for Ninth Circuit to intervene in CFTC dispute
Arizona officials are currently enjoined against pursuing civil and criminal actions against Kalshi and other prediction market exchange operators, but the Director of the Arizona Department of Gaming is trying to change that situation. Director Jackie Johnson has asked the Ninth Circuit to vacate the order installing the injunction based on a recent decision of a three-judge panel from that court.
That panel issued an opinion in Kalshi v. Assad that sports event contract trading on the platform are legally tantamount to sports wagering and Nevada authorities are within their rights to enforce that state’s gambling laws against Kalshi. As Arizona is also in the Ninth Circuit’s jurisdiction, Johnson argues that the agency she leads should have the same leeway in its state.
Coinbase and Crypto.com have both appealed the Ninth Circuit panel’s opinion in Kalshi v. Assad to the US Supreme Court. Kalshi has asked the Ninth Circuit for a rehearing with the full court.
Also of note on the west coast over the past few days is a change on the bench presiding over Underdog v. Brown in the District Court for the Western District of Washington. Judge Robert Lasnik has recused himself and Judge Thomas Zilly will now preside over that case.
