Kalshi Wins Reprieve on Massachusetts Ban

Prediction market operator Kalshi has secured a temporary reprieve in its fight against Massachusetts regulators, after an appeals court judge delayed enforcement of a ruling that would have forced the company to shut down its sports prediction contract markets. 

According to Bloomberg Law, Judge Sabita Singh of the Massachusetts Appeals Court granted Kalshi’s request to stay the order while a panel of judges reviews the company’s challenge. Judge Singh said the stay was issued without any suggestion of a view on the merits of the legal action.

The dispute is part of a broader clash between state regulators and federally regulated prediction market apps. Companies including Kalshi and Polymarket have faced scrutiny over sports-related event contracts that, according to gaming authorities, amount to effectively unlicensed sports betting. 

In Massachusetts, led by Attorney General Andrea Campbell, the state has argued that these markets should be regulated by gambling regulators. 

Kalshi, however, has argued that its markets are regulated by the Commodity Futures Trading Commission (CFTC) and are under exclusive federal jurisdiction. That argument failed earlier this year when Suffolk Superior Judge Christopher Barry-Smith granted a request for a preliminary injunction. Barry-Smith ruled that Kalshi’s interpretation of the CFTC’s authority was too broad.

The judge later denied Kalshi’s request to pause the injunction pending appeal. The new stay from the appeals court temporarily reverses that outcome, setting up a key test of whether federal commodities law overrides state gaming enforcement.

CFTC defends federal authority

The jurisdictional fight has intensified at the federal level. The CFTC has stepped into another similar case, filing an amicus brief in the Ninth US Circuit Court of Appeals in support of Crypto.com in its dispute with Nevada regulators.

In a Wall Street Journal op-ed, the new Chairman of the CFTC, Michael Selig, said the agency has long held authority over prediction markets and whether event contracts constitute gambling. He added that nearly 50 legal cases are currently active against such platforms and warned that the CFTC would not allow states to ‘invade’ its exclusive jurisdiction.

“These exchanges aren’t the Wild West, as some critics claim, but self-regulatory organizations that are examined and supervised by experienced CFTC staff,” Selig said. 

In public remarks earlier this year, Chairman Selig also said that the commission was prepared to draft clearer rules governing prediction markets and to defend its jurisdiction in court, and in a video posted online earlier this week, he said the CFTC would see any state challengers in court. 

His remarks haven’t had a positive impact on US states, however. Utah Governor Spencer Cox responded to Selig, criticizing the CFTC’s approach to take away regulations from states. 

“Mike, I appreciate you attempting this with a straight face, but I don’t remember the CFTC having authority over the ‘derivative market’ of LeBron James rebounds. Let me be clear, I will use every resource within my disposal as governor of the sovereign state of Utah, and under the Constitution of the United States to beat you in court,” he said.