TLDR
- Massachusetts Supreme Judicial Court heard oral arguments on May 4 over whether Kalshi can offer sports-event contracts without a state gaming license
- Justices questioned how Kalshi’s products differ from traditional sports betting
- Kalshi argues only the federal CFTC has authority over its business under the Dodd-Frank Act
- Attorney General Andrea Campbell won a preliminary injunction in February to block Kalshi’s sports contracts in the state
- If the injunction holds, Massachusetts would become the second state after Nevada to block Kalshi through the courts
The Massachusetts Supreme Judicial Court heard oral arguments on Monday over whether prediction market platform Kalshi can continue offering sports-event contracts in the state. The case could determine whether Massachusetts becomes the second state to block the company through the courts.
Kalshi’s lawyer, Grant Mainland, argued that only the U.S. Commodity Futures Trading Commission has authority over the company’s business. He asked the court to overturn a preliminary injunction that blocks Kalshi from letting users place financial bets on football, baseball, and other sports without a state gaming license.
“This is fundamentally a federal regulatory issue,” Mainland told the court. Several of the seven justices pushed back on that claim during the hearing.
Justice Gabrielle Wolohojian pressed Mainland on how Kalshi’s products are different from traditional sportsbooks. “In what way do they differentiate from what would colloquially be known as a bet,” she asked.
Kalshi’s Federal Preemption Argument
Mainland pointed to the company’s registration with the CFTC. He argued that Kalshi’s sports contracts qualify as “swaps,” a type of financial derivative that Congress placed under exclusive CFTC oversight through the Dodd-Frank Act.
He also cited a recent ruling from the 3rd U.S. Circuit Court of Appeals in April. That court stopped New Jersey regulators from pursuing enforcement against Kalshi, backing the company’s position on federal authority.
Mainland added that the CFTC itself filed an amicus brief supporting Kalshi’s appeal in Massachusetts. The federal regulator’s involvement signals its view that these contracts fall under its jurisdiction.
Kalshi and similar platforms let users trade on outcomes of events. These range from elections to sports games. State officials say these platforms are operating without proper licenses.
Massachusetts Attorney General Andrea Campbell filed suit against Kalshi last September. She argued the company was breaking state gaming laws, including rules that bar wagers from anyone under 21.
Campbell won a preliminary injunction in February that would stop Kalshi from offering sports contracts in the state. That order has been paused while Kalshi appeals.
States Push Back on Prediction Market Platforms
If the injunction takes effect, Massachusetts would join Nevada as the second state to block Kalshi through the courts. The case has become a key front in the broader legal fight over how prediction markets are regulated across the country.
Justice Scott Kafker questioned whether Congress ever intended to strip states of their traditional role in policing gambling. “If you want to gamble on a game, this is one way to do it,” he said.
Kafker added that Congress would have been expected to speak clearly if it meant to remove state powers over gambling. His comments echoed concerns raised by regulators in multiple states.
Assistant Attorney General Gerard Cedrone warned that ruling in Kalshi’s favor would mark a “sea change” in gaming regulation. “It would be blocking out state regulation of what is in all respects a sports bet,” he told the justices.
The case remains one of several active legal battles Kalshi faces across the United States. The company continues to operate in most states while appeals proceed.
The court did not indicate when it would issue a ruling. The CFTC’s amicus brief supporting Kalshi’s appeal was among the most recent filings in the case.
