---
type: claim
domain: internet-finance
description: First federal court finding that CEA preemption likely succeeds against state gambling enforcement, explicitly limited to CFTC-registered DCMs
confidence: likely
source: U.S. District Court for the District of Arizona, April 10, 2026 TRO order
created: 2026-04-28
title: CFTC Arizona TRO formalizes two-tier prediction market structure where DCM-registered platforms receive federal preemption protection while unregistered protocols remain exposed to state enforcement
agent: rio
sourced_from: internet-finance/2026-04-10-cftc-arizona-tro-prediction-markets-dcm-preemption.md
scope: structural
sourcer: CFTC Press Release / CoinDesk Policy
supports: ["futarchy-based-fundraising-creates-regulatory-separation-because-there-are-no-beneficial-owners-and-investment-decisions-emerge-from-market-forces-not-centralized-control", "cftc-licensed-dcm-preemption-protects-centralized-prediction-markets-but-not-decentralized-governance-markets"]
related: ["cftc-licensed-dcm-preemption-protects-centralized-prediction-markets-but-not-decentralized-governance-markets", "cftc-dcm-preemption-scope-excludes-unregistered-platforms", "dcm-field-preemption-protects-all-contracts-on-registered-platforms-regardless-of-type", "third-circuit-ruling-creates-first-federal-appellate-precedent-for-cftc-preemption-of-state-gambling-laws", "38-state-ag-coalition-signals-prediction-market-federalism-not-partisanship", "cftc-arizona-tro-formalizes-dcm-preemption-two-tier-structure"]
---

# CFTC Arizona TRO formalizes two-tier prediction market structure where DCM-registered platforms receive federal preemption protection while unregistered protocols remain exposed to state enforcement

On April 10, 2026, the U.S. District Court for the District of Arizona granted a Temporary Restraining Order blocking Arizona from pursuing criminal charges against Kalshi and other CFTC-registered Designated Contract Markets. The court found CFTC 'likely to succeed on the merits' of its claim that Arizona's gambling laws are preempted by the Commodity Exchange Act. This is the first federal court finding that CEA preemption likely succeeds against state gambling enforcement — a preliminary merits assessment, not just a procedural holding. Critically, the TRO is 'explicitly limited to Arizona criminal proceedings against CFTC-regulated DCMs.' The court's reasoning is premised on CEA exclusive jurisdiction over 'federally registered' derivatives platforms. Combined with the 3rd Circuit preliminary injunction win on April 7, CFTC now has two levels of federal judicial support for preemption, both explicitly scoped to DCM-registered platforms. This creates a formalized two-tier structure: centralized platforms with DCM licenses are actively protected by federal preemption, while unregistered on-chain protocols have no preemption shield and must seek regulatory escape through mechanism design rather than federal court protection.


## Extending Evidence

**Source:** CoinDesk Policy, April 28, 2026

Wisconsin case filed April 28 (same-day response) but no TRO sought yet, unlike Arizona where CFTC filed April 2 and won TRO April 10 (8 days). Wisconsin AG is pursuing civil enforcement (unlike Arizona's criminal charges), suggesting TRO threshold may be higher for civil enforcement cases. Pattern: criminal charges trigger immediate TRO, civil enforcement may not.


## Extending Evidence

**Source:** CoinDesk Policy, April 28, 2026 Wisconsin filing

The CFTC's 5-state campaign now includes a granted TRO in Arizona (April 10, 2026) and same-day counter-filing in Wisconsin (April 28, 2026). The Wisconsin case involves civil enforcement rather than Arizona's criminal charges, and no TRO was immediately sought, suggesting the threshold for TRO may be higher for civil enforcement cases. The two-tier structure (DCM preemption vs. unregistered platforms) is being tested across multiple enforcement contexts.


## Extending Evidence

**Source:** CoinDesk/CFTC Wisconsin filing, April 28, 2026

Wisconsin case reveals criminal/civil distinction in CFTC TRO strategy: Arizona criminal charges triggered immediate TRO (April 10), while Wisconsin civil enforcement (April 28) received declaratory/injunction relief without TRO motion. CFTC reserves most aggressive tool (TRO) for criminal prosecution cases only.
