Massachusetts Court Upholds Block on Kalshi's Sports Contracts

A Massachusetts judge has ordered prediction-markets operator Kalshi to halt sports-related activity in the state. The ruling says the company cannot allow residents to place financial wagers on sporting events unless it complies with state gaming laws. 

Suffolk County Superior Court Judge Christopher Barry-Smith said he would issue a preliminary injunction sought by Massachusetts Attorney General Andrea Joy Campbell, barring Kalshi from providing sports event contracts in the Commonwealth unless it requests, and is approved for, a license.

In his written decision, Barry-Smith said state oversight of sports wagering directly serves public health, consumer protection, and the state's financial interests. He rejected Kalshi's argument that federal regulation alone governs its platform, concluding that the company relied on an overly expansive interpretation of federal law. 

“There is no real question that licensure, and the consequent oversight, of sports wagering operations in the state serves both public health and safety, and the Commonwealth’s financial interest,” he wrote.

The judge added that Congress did not intend to override long-standing state authority to regulate gambling, noting that state gaming laws can coexist with federal oversight by the Commodity Futures Trading Commission (CFTC).

The injunction is expected to be finalized after a Friday hearing, where Barry-Smith could postpone enforcement of the order to allow Kalshi time to appeal. If he rules against the postponement, the order will take effect that day.

Massachusetts became the first state to seek an injunction to immediately shut down Kalshi's sports offerings, alleging the company was effectively running a sportsbook without approval from the Massachusetts Gaming Commission. The state also argued that Kalshi allowed users as young as 18 to participate, below the Massachusetts sports betting minimum age.

Tennessee enforcement action paused

While Massachusetts regulators advanced their case, Kalshi recently secured temporary relief in Tennessee. On January 12, District Judge Aleta Trauger issued a temporary restraining order preventing state authorities from following through with a cease-and-desist order against the company.

The ruling came days after Tennessee regulators directed several prediction market apps, such as Kalshi, Polymarket, and Crypto.com, to halt contracts for sports events in the state. They were also ordered to void existing contracts and refund deposits, and to stop all operations in Tennessee by Jan. 31. 

According to the order, noncompliance could result in penalties of up to $25,000 per violation and possible criminal referrals.

Trauger found that Kalshi was likely to succeed on the merits of its claims and would face irreparable harm if enforcement were to proceed while the case is litigated. Kalshi reiterated the CFTC's sole jurisdiction and that it is shielded from state gambling laws through federal preemption. 

The judge did not resolve that issue but paused enforcement pending a preliminary injunction hearing scheduled for January 26.

The Tennessee order added to a growing patchwork of court decisions. Federal courts in New Jersey and Nevada have previously blocked state enforcement against Kalshi, while, like Massachusetts, a Maryland court judge allowed regulators there to proceed.