Kalshi Loses in Massachusetts, Polymarket Sues — Will the CFTC Intervene?

As followers basked in the afterglow of Super Bowl LX (and replayed the Bad Bunny Halftime Show), they could not have observed that the battle between Massachusetts and prediction markets, Kalshi and Polymarket, hit a brand new degree.

On Feb. 9, a Massachusetts choose denied Kalshi’s emergency movement to remain an injunction barring its sports activities contracts in the state. Hours later, Polymarket preemptively sued the Massachusetts Attorney General to cease the similar factor from taking place to it. Both platforms argue that the federal authorities — not states — has unique authority over their markets. But a authorized professional tells DeFi Rate that argument shall be settled in courtroom, not by regulators.

“The core preemption difficulty that’s being fought in courts throughout the nation is certainly a query of federal vs. state,” Andrew Kim, associate at Goodwin Law’s Appellate and Supreme Court Litigation apply, tells DeFi Rate. “Ultimately, it’s as much as the courts to determine the query, not the CFTC.”

Kalshi denied keep as Polymarket information preemptive lawsuit

To recap: Massachusetts Attorney General Andrea Joy Campbell sued Kalshi on behalf of the Commonwealth of Massachusetts in September 2025. The go well with alleged that the platform’s sports-related event contracts represent unlicensed sports activities wagers, since Kalshi had neither utilized for nor obtained a Massachusetts sports activities wagering license from the state’s gaming fee. The Massachusetts Gaming Commission had already warned its licensed sportsbooks in opposition to coming into the prediction market area, signaling a broad crackdown. In January, the AGO secured a preliminary injunction, prohibiting Kalshi from providing sports-related contracts in the state.

Then on Feb. 9, Massachusetts Superior Court Judge Christopher Barry-Smith denied Kalshi’s emergency movement to remain the injunction. Kalshi claimed that implementing it might trigger “irreparable hurt.” The ruling means Kalshi has 30 days from the Feb. 9 resolution to implement geolocation expertise blocking Massachusetts customers from accessing sports activities occasion contracts.

On the similar day, Polymarket preemptively sued the Massachusetts Attorney General’s Office and the Massachusetts Gaming Commission in Boston federal court. Polymarket’s objective: cease Massachusetts from doing to it what it’s already doing to Kalshi.

“Congress gave the CFTC [Commodity Futures Trading Commission], not states, unique authority over occasion contracts,” wrote Neal Kumar, Polymarket’s Chief Legal Officer, on Feb. 9. “These are nationwide markets with crucial questions that have to be resolved in federal courtroom. Racing to state courtroom to attempt to shut down Polymarket US and different prediction markets doesn’t change federal legislation — and states like MA and [Nevada] which have carried out so will miss a tremendous alternative to assist construct markets for tomorrow.”

Kumar’s reference to Nevada is notable. A Carson City choose granted the Nevada Gaming Control Board a 14-day non permanent restraining order in opposition to Polymarket on Jan. 29, blocking the platform from providing occasion contracts in the state — together with throughout Super Bowl week. A listening to on a preliminary injunction is scheduled for Feb. 11.

Federal vs. state: who decides the way forward for prediction markets?

Prediction exchanges’ broader argument — that the CFTC, not states, holds unique authority — suggests these fights could finally come all the way down to a division of powers. Do states’ gaming legal guidelines override the federal regulatory framework, or vice versa? Massachusetts’ method has already develop into a template for other states, with Nevada, New York, Tennessee, and New Jersey all citing its ruling in their very own circumstances in opposition to prediction market platforms.

While Kumar hopes the CFTC would possibly step in for a swift decision, Kim says the matter shall be dealt with by the courts — which suggests it received’t get resolved anytime quickly.

“Did Congress intend for the CFTC, and solely the CFTC, to supervise occasion contracts?” asks Kim. “Or do the states get to control alongside the CFTC, given the overlap between occasion contracts and bets/wagers?”

“Congress, in fact, can step in at any time, however I doubt there shall be legislative intervention anytime quickly,” Kim added.

Selig has indicated an intention to weigh in on ongoing courtroom battles, breaking a protracted silence on the matter from the CFTC.

“[CFTC] Chairman Michael Selig has made clear that he intends for the CFTC to be an advocate for the prediction markets, and never only a impartial bystander. But on the important difficulty, all the CFTC can do is assist persuade.”

CFTC withdraws outdated guidelines, however courts could have the ultimate say

This authorized battle — now taking part in out in Massachusetts, Nevada, and past — would possibly jeopardize Chairman Selig‘s imaginative and prescient of the CFTC exercising a light-weight contact in prediction market regulation. In a Jan. 20 op-ed in the Washington Post, Selig laid out the CFTC’s mission to “ship the minimal efficient dose of regulation — nothing extra and nothing much less” and to place an finish to “policymaking by enforcement.”

Selig, who stays the sole CFTC commissioner when the fee usually has 5 members appointed by the President, has signaled a hands-off method to the rising prediction markets area. But his actions have been something however passive to this point.

On Feb. 4, the CFTC withdrew a proposed 2024 rule titled “Event Contracts” that had outlined occasion contracts involving political contests as gaming. The company additionally withdrew a September 2025 employees advisory on sports activities occasion contracts that had cautioned platforms to account for state-level enforcement dangers. “Today’s actions mirror the CFTC’s dedication to lawful innovation in our markets,” stated Chairman Selig, calling the 2024 rule “the prior administration’s frolic into benefit regulation with an outright prohibition on political contracts forward of the 2024 presidential election.”

Selig added that he seems to be “ahead to working with employees on an occasion contracts rulemaking.” Given the authorized disputes now unfolding in Massachusetts, Nevada, and past, that rulemaking could arrive sooner somewhat than later — however whether or not it could resolve the federal vs. state standoff earlier than the courts do stays an open query.

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