Massachusetts is poised to become the first state to enforce a ban on Kalshi’s sports-prediction markets after a Suffolk Superior Court judge ruled in favor of state regulators.
In a decisive Tuesday ruling, Judge Christopher Barry-Smith rejected Kalshi’s argument that its regulation under the federal Commodity Futures Trading Commission (CFTC) preempted state gambling laws, calling the defense “not compelling”.
The ruling empowers the Attorney General’s office to seek an immediate injunction, which could halt Kalshi from accepting sports-related trades from Massachusetts residents as early as Friday. The state argued effectively that Kalshi’s event contracts, which by May 2025 accounted for 70% of its revenue, function identically to sports wagers and must be licensed accordingly.
AG Campbell: “No Exceptions”
Attorney General Andrea Campbell hailed the decision as a critical victory for consumer protection and state sovereignty. “The Court has made clear that any company that wants to be in the sports gaming business in Massachusetts must play by our rules, no exceptions,” Campbell stated. She emphasized that forcing operators into the regulated market is a “major step” toward reducing gambling-related harms.
Implications for Prediction Markets
The dispute centers on whether prediction markets are financial tools or gambling. Massachusetts imposes a 20% tax on mobile sports betting, creating a strong financial incentive to prevent unregulated “trading” platforms from siphoning revenue. Judge Barry-Smith noted that if Congress intended to strip states of their authority to regulate sports wagering, “it would have said so clearly”.
With the injunction looming, the case is being watched closely by the industry. If Massachusetts successfully enforces this ban, it could serve as a blueprint for other states to move from cease-and-desist letters to direct legal action against prediction markets operating outside state gaming frameworks.
