Arkansas civil penalties test the CFTC event-contract claim

The Arkansas Deceptive Trade Practices Act, Arkansas Code section 4-88-113(a)(3), authorises a circuit court to assess up to $10,000 per violation, and the complaint the Commodity Futures Trading Commission (CFTC) filed on November 12, 2026 treats that cap, on event contracts at a designated contract market (DCM), as the injury federal preemption has to meet.

The pleading in Release Number 9325-26 is Case 4:26-cv-01255-BSM. Paragraph 73 pairs the cap with a Kalshi fee of $0.07 to $2.63 per 100 contracts and says a per-violation assessment could reach the hundreds of millions of dollars. Attorney General Tim Griffin filed Independence County number 32CV-26-717 on November 4, 2026, seeking restitution, penalties, taxes and an injunction.

Key facts

• Release Number 9325-26, dated November 13, 2026, announces a suit to block Arkansas from halting event-contract trading and from seeking civil penalties described as reaching the hundreds of millions of dollars.
• The complaint is signed November 10, 2026, shows a filed date of November 12, 2026, and carries the header Case 4:26-cv-01255-BSM in the Eastern District of Arkansas.
• The state action quoted throughout is Arkansas v KalshiEX LLC, number 32CV-26-717, filed November 4, 2026 in Independence County against Kalshi Inc and KalshiEX LLC.
• Arkansas Code section 4-88-113(a)(3) lets the circuit court assess a civil penalty payable to the state, with a ceiling of $10,000 per violation.
• Paragraph 72 records fees of $0.07 to $2.63 per 100 contracts on most markets, citing the Kalshi fee schedule as visited on November 10, 2026.
• Paragraph 35 counts 30 exchanges with active designations, and paragraph 5 cites Kalshi's Order of Designation dated November 3, 2020.
• Opinion 2025-073, issued October 23, 2025 to Senator Bryan B King, answers that a Kalshi-style model constitutes gambling or gaming and requires a gaming license.

Where the penalty figures come from

The account rests on primary documents from the Commodity Exchange Act (CEA) amendments of 1974 and Amendment 100 of 2018 through the complaint announced on November 13, 2026. The central text is the 34-page complaint, plaintiffs the United States and the CFTC, defendants the State of Arkansas and Tim Griffin in his official capacity. Beside it sit Arkansas Code section 4-88-113, Amendment 100, section 3, section 7-1-103, Opinion 2025-073, the November 4 release, and the October 19, 2026 swap texts at 91 Federal Register 65969 and 91 Federal Register 66022. Gibson Dunn's note of November 13, 2026 logs the announcement. Scope is the Arkansas statute and the CEA on DCM event contracts. Paragraph 73 states the ceiling and the fee band and leaves the in-state contract count out of the text.

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What section 4-88-113 lets a circuit court assess

Section 4-88-113(a) gives the circuit court three tools in a civil enforcement the Attorney General brings: an injunction against a practice the chapter prohibits, restoration of money or property to a purchaser who suffered an ascertainable loss, and a penalty payable to the state at a ceiling of $10,000 per violation. Subsection (b) allows suspension or forfeiture of a charter or other authorisation to do business. Subsection (c) prices breach of an injunction at a further penalty capped at $10,000 for any single action, and subsection (d) extends joint and several liability to a person who knew or reasonably should have known the facts.

The civil penalty under the Arkansas Deceptive Trade Practices Act is a circuit-court assessment payable to the state, and Arkansas Code section 4-88-113(a)(3) sets the ceiling at $10,000 per violation. Neighbouring clauses let the court enjoin the practice and restore money to a purchaser who suffered an ascertainable loss, and breach of an injunction carries a further penalty capped at $10,000 for any single action. Joint-and-several liability reaches a controlling or assisting person who knew or reasonably should have known the facts. The November 12 complaint places that ceiling against fees of $0.07 to $2.63 per 100 contracts, the band paragraph 72 takes from the exchange fee schedule visited on November 10, 2026, and paragraph 73 states that a per-violation theory could reach the hundreds of millions of dollars. The count, the payee and the ceiling are the injury the Commission asks the Eastern District to declare preempted on a DCM.

The November 4 release states the relief as restitution, penalties, taxes and an injunction. Paragraphs 69 to 73 record ADTPA claims, unjust enrichment, unpaid sales and use taxes, and accounts opened by Arkansans aged 18 through 20. Paragraph 28 records the classification concession: the contracts are structured as binary options, which 7 USC 1a(47)(A) picks up with an event-contingent payment. 7 USC 2(a)(1)(A) supplies exclusive jurisdiction, 7 USC 7a-2(c)(5)(C) leaves the public-interest screen with the Commission, and listing runs through 17 CFR 40.2.

"As prediction markets continue to prove their value in being useful for risk management and providing the public with valuable information about the future, Arkansas seeks to shut down event contracts ranging from sports and politics to other important world events."

— Michael Selig, Chairman, Commodity Futures Trading Commission (CFTC Release Number 9325-26, November 13, 2026)

How four rulebooks price one Arkansas fixture

Which book claims a team contract, or an Arkansas election contract, sets the price. Amendment 100 pairs a licensed casino and an age floor of 21 with a Class A misdemeanor for an election bet under section 7-1-103(a)(20) and (b)(1). Federal law puts exclusive jurisdiction on a DCM, and the complaint cites a Third Circuit injunction keeping New Jersey gambling enforcement off those sports contracts. An October 26, 2026 Utah complaint, covered in CFTC sues Utah to defend exclusive event-contract jurisdiction, pleaded a criminal wagering code, while the Arkansas pleading treats the ADTPA multiplier as the irreparable harm.

Sources: complaint filed November 12, 2026; section 4-88-113; Amendment 100, section 3; 23 CAR section 358-425; Release Number 8478-22. Figures are current as of November 14, 2026.

One sporting fixture can carry four legal prices at the same time. Arkansas Code section 4-88-113(a)(3) prices Attorney General enforcement at a ceiling of $10,000 per violation, and Opinion 2025-073 tells Senator Bryan B King that a Kalshi-style model is gambling and requires a gaming license. Amendment 100, section 3(b), authorises a casino licensee to accept sports wagers, section 3(d) prohibits casino gaming under age 21, and 23 CAR section 358-425 limits a wagering account to persons 21 or older. On a DCM, 7 USC 2(a)(1)(A) places swaps inside Commission jurisdiction, and paragraph 35 counts 30 active designations, including Kalshi's designation of November 3, 2020. The pleading cites KalshiEX LLC v Flaherty, decided April 6, 2026, for field preemption, as traced in How Kalshi v. Flaherty splits event contracts from gambling law. The dollar on the fixture is the state cap, the age rule, the $1.4 million order of January 3, 2022, or that injunction.

Opinion 2025-073 also shuts a fantasy-sports side door. Sections 23-116-101 and 23-116-103 exempt a paid fantasy game where section 23-116-102 requires a win built on accumulated athlete statistics rather than one team's score. The opinion places a Kalshi-style contract outside that exemption, which is why the November 4 case chooses the ADTPA, and it quotes Sharp v State on risking money where one person must lose and the other gain. The October 19 rule at 91 Federal Register 65969, examined in CFTC carves casino wagers out of the swap definition, keeps a licensed sportsbook wager outside the word swap.

Why the Commission calls the cap irreparable harm

Paragraphs 71 to 75 recite the ceiling and the fee band, then say a per-violation assessment would dwarf Arkansas fee income and could reach the hundreds of millions of dollars. The prayer asks for a declaration that the listed laws are preempted on DCM transactions, plus a preliminary and permanent injunction covering regulated entities, affiliates and partners. Paragraphs 89 to 91 plead express, field and conflict preemption over the ADTPA, sections 5-66-101 to 5-66-120, section 7-1-103, 23 CAR sections 358-2001 to 358-2031, and common law.

The Capital City judgment shows the cap once a court counts. The August 25, 2026 release says the Pulaski County Circuit Court found 47 tree-service violations and imposed $10,000 for each, totalling $470,000. Each act was its own violation. The federal complaint imports that method and leaves the Arkansas trade count out of the text, so the hundreds-of-millions figure stays an allegation about scale.

Off a designated market the federal number is already collected. Release Number 8478-22 ordered Blockratize Inc to pay a $1.4 million civil monetary penalty on January 3, 2022, Docket 22-09, plus a wind-down, after more than 900 binary event markets from about June 2020. On a designated market the Arkansas complaint asks the court to hold that the state cap yields. Trading supervision is cited through In re Gabriel Perez, Docket 26-06, covered in The CFTC's Perez order makes a speech draft inside information. Injunctions in Arizona, Illinois and Minnesota, including the order of July 27, 2026, leave the ADTPA question open.

What the cap means for exchanges, intermediaries, funds and counsel

For a DCM the collision is geographic. Regulation 38.151(b) requires impartial access, and Release Number 9323-26 on November 5, 2026 told DCMs to cease domestic geographic restrictions that violate it within 30 days, or to explain the obstacle to the Division of Market Oversight, with the same clock for intermediaries. Paragraph 81 says Arkansas enforcement would push a DCM to cut off state residents. Customer funds remain under 7 USC 7(d)(11), and the listing brake the complaint tries to keep federal is 17 CFR 40.2(c).

An intermediary can sit inside the prayer while sitting outside the state caption. Prayer paragraph B would bar investigations of regulated entities and their affiliates and partners for DCM conduct, so a futures commission merchant (FCM) carrying the accounts, and an introducing broker behind it, would fall inside a granted injunction. Off-exchange event contracts remain the Blockratize pattern, priced at $1.4 million plus a wind-down.

A fund on a DCM is in the market the Commission asks the court to keep open, while a fund facing a casino licensee is in the sports wager section 3(b) authorises, under the age floor in section 3(d). Counsel still have the pleaded sales and use taxes, the ages 18 through 20 read against Amendment 100, and the binary-options concession. The complaint describes 7 USC 13a-2 as preserving state antifraud suits. Paragraph 86 says a final version of the October 19 proposal would supply an independent swap basis.

"Instead of obtaining the licenses, submitting to the oversight, complying with the restrictions, and paying the taxes required of lawful gambling operators in Arkansas, Kalshi opened its platforms to Arkansas consumers, including individuals as young as 18 years old, encouraged them to wager real money on sporting and entertainment events, and profited from those wagers."

— Tim Griffin, Attorney General of Arkansas (Arkansas Attorney General release, November 4, 2026)

What the Eastern District and the comment file still hold

The complaint seeks preliminary and permanent relief because it treats a Supremacy Clause injury as irreparable, citing Article VI, clause 2, and United States v Missouri, 114 F4th 980 (8th Circuit, 2024). The Eastern District sits in that circuit. A granted order in Case 4:26-cv-01255-BSM is still ahead of these papers. Release Number 9325-26 calls Arkansas the 11th state sued, and the complaint lists ten priors, Arizona through Utah. The same day's Release Number 9326-26 calls Louisiana the 12th after a state-court order there, and the ADTPA theory remains for decision on this statute.

Both October 19 texts take comments through November 18, 2026. The interim final rule, RIN 3038-AF81, excludes a qualifying sportsbook wager from the swap definition, and the proposal, RIN 3038-AF82 at 91 Federal Register 66022, would add event contracts on sports, politics, culture and weather to 17 CFR 1.3. The petition in Flaherty v KalshiEX LLC, number 26-299, described in NFL tells the Supreme Court sports contracts are gambling, had a response date of November 9, 2026. The complaint cites Assad, number 25-7516, for express preemption, and on the regulation desk the contract count behind the hundreds of millions stays unreproduced.

TL;DR

Arkansas Code section 4-88-113(a)(3) lets a circuit court assess up to $10,000 per violation, and the CFTC complaint filed November 12, 2026, Case 4:26-cv-01255-BSM, treats that cap as the reason preemption has to reach event contracts on a designated contract market. Tim Griffin sued Kalshi Inc and KalshiEX LLC on November 4, 2026, number 32CV-26-717, for restitution, penalties, taxes and an injunction. Paragraph 72 sets the fee at $0.07 to $2.63 per 100 contracts, and paragraph 73 says a per-violation theory could reach the hundreds of millions of dollars while leaving the trade count out of the text. The same office took the $10,000 maximum 47 times in an August 25, 2026 judgment of $470,000. Swap-rule comments close November 18, 2026.

FAQ

What does Arkansas Code section 4-88-113 allow the Attorney General to seek?

Section 4-88-113(a) lets a circuit court enjoin a prohibited practice, restore money to a purchaser who suffered an ascertainable loss, and assess a civil penalty payable to the state with a ceiling of $10,000 per violation. Breach of an injunction carries a further penalty capped at $10,000 for any single action. The November 4 Kalshi case uses that statute with unjust enrichment, taxes and an injunction, and the August 25 Capital City judgment applied the $10,000 maximum to each of 47 counted violations.

Who filed suit on November 4, 2026, and who filed on November 12, 2026?

On November 4, 2026 Attorney General Tim Griffin filed Arkansas v KalshiEX LLC, number 32CV-26-717, in Independence County, naming Kalshi Inc and KalshiEX LLC and seeking restitution, penalties, taxes and an injunction. On November 12 the United States and the CFTC filed Case 4:26-cv-01255-BSM against the State and against Griffin in his official capacity. The complaint is signed November 10 and was announced on November 13 in Release Number 9325-26, and the prayer also reaches affiliates and partners if an injunction is entered.

Does the federal complaint demand a summed dollar figure from the state?

The complaint recites the $10,000 ceiling, records fees of $0.07 to $2.63 per 100 contracts, and states that a per-violation assessment could reach the hundreds of millions of dollars. Those paragraphs leave the Arkansas transaction count out of the text, so the cap and the fee band are verifiable and the aggregated dollar remains the Commission's assertion. The relief requested is a declaratory judgment and an injunction, plus costs and fees, and the state release lists restitution, penalties, taxes and an injunction.

How do Amendment 100 and the age rules enter the penalty case?

Amendment 100, section 3(b), authorises a casino licensee to accept sports wagers when federal law allows, and section 3(d) prohibits casino gaming under age 21. Rule 23 CAR section 358-425 limits a wagering account to persons 21 or older. The federal complaint quotes a state allegation that Kalshi opened accounts to Arkansans aged 18 through 20 and treats that exposure as an unconscionable practice. The age fact is evidence inside the ADTPA case. Opinion 2025-073, on October 23, 2025, had already said a Kalshi-style model requires a gaming license.

What did the November 5 access interpretation require of a DCM?

Release Number 9323-26 interprets Regulation 38.151(b) and tells designated contract markets to cease domestic geographic restrictions that violate impartial access within 30 days, or to explain to the Division of Market Oversight why compliance is infeasible, with the same clock for intermediaries. Chairman Michael Selig said derivatives markets must operate on a uniform national basis. Paragraph 81 pleads that reading as a conflict, because state enforcement that pushes a DCM to cut off Arkansas residents would collide with the federal access rule.

Has a judge already blocked the Independence County case?

The November 13 documents are the announcement and a complaint seeking a preliminary and permanent injunction, and a granted order in Case 4:26-cv-01255-BSM sits outside those texts. The complaint records injunctions against state enforcement in Arizona, Illinois and Minnesota, including the Minnesota order of July 27, 2026, and it cites Flaherty from April 6, 2026 and Assad from August 28, 2026. Release Number 9325-26 adds amicus briefs in four federal courts of appeal and one state supreme court.

This article is informational analysis only and does not constitute legal, regulatory, tax, or investment advice. Regulatory frameworks change frequently and interpretation depends on facts and circumstances; primary documents and official regulator guidance always supersede summaries. Firms should consult qualified legal counsel and their relevant supervisory authority before taking any action based on the analysis above.