---
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 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.
