Kalshi to halt operations in Massachusetts after judge ruling
A Massachusetts judge has ruled that prediction market Kalshi cannot offer sports betting products to state residents without securing a proper gaming license.
The decision delivers a significant legal setback to the prediction market industry, as battles between these operators and state regulatory bodies continue across the country.
According to Reuters, the ban could come into effect as early as January 23 and will become the first such ban in the country. Kalshi has said it plans to appeal the decision that was made by Suffolk County Superior Court Judge Christopher Barry‑Smith.
Judge Barry-Smith wrote, “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.”
The preliminary injunction, issued by Judge Barry-Smith, came at the request of Massachusetts Attorney General Andrea Joy Campbell. Campbell filed her lawsuit in September 2025, asserting that Kalshi’s sports event contracts amount to unlicensed sports wagering.
Speaking on the verdict, Campbell said it marks a significant step in protecting Massachusetts residents from the danger posed by the unlicensed gambling that these prediction market platforms can bring.
With more than 10 other states currently involved in legal battles with prediction market platforms, the new verdict could potentially shape how prediction markets are regulated in the future.
Charlotte Capewell brings her passion for storytelling and expertise in writing, researching, and the gambling industry to every article she writes. Her specialties include the US gambling industry, regulator legislation, igaming, and more.
Verticals:
Sectors:
Topics:
Dig Deeper
Related stories
2026/01/13: Federal judge blocks Tennessee’s attempt to halt Kalshi sports event contracts
2025/09/13: Massachusetts Attorney General sues Kalshi for illegal sports wagering operations
2025/10/29: Judge returns Kalshi vs. Massachusetts case to state court
2025/05/20: Judge commits to move quickly on Kalshi Nevada judgment
2026/01/13: Federal judge blocks Tennessee’s attempt to halt Kalshi sports event contracts
2025/09/13: Massachusetts Attorney General sues Kalshi for illegal sports wagering operations
2025/10/29: Judge returns Kalshi vs. Massachusetts case to state court
2025/05/20: Judge commits to move quickly on Kalshi Nevada judgment
The Backstory
How the Massachusetts clash reached a turning point
Massachusetts has been a bellwether in the fight over whether federally regulated prediction markets can offer sports contracts without a state gaming license. The dispute began in earnest when Attorney General Andrea Joy Campbell filed a lawsuit alleging Kalshi’s sports event contracts function as unlicensed sports wagering. As detailed in Complete iGaming’s coverage of the filing, the state argued that Kalshi’s moneyline, spread and over-under contracts mirror traditional sports bets and bypass consumer protections required of licensed operators, including age limits and responsible gambling tools. That legal action, outlined in Massachusetts Attorney General sues Kalshi for illegal sports wagering operations, prompted a court fight over the bounds of state oversight versus federal commodities regulation.
The attorney general’s complaint drew on a public health frame and the state’s licensed market structure to argue that prediction markets cannot carve out an exception for sports outcomes. The office cited risks to consumers, especially younger users, and pointed to gaps in safeguards that licensed sportsbooks must provide. The legal posture aligned with a broader initiative the attorney general launched to curb youth gambling exposure, a public-private awareness effort described in the state’s announcement of the Youth Sports Betting Safety Coalition.
Kalshi, for its part, has maintained that its sports event contracts are federally regulated derivatives under the Commodity Exchange Act and fall outside state gambling regimes. That preemption claim underpins the company’s litigation strategy nationally and set the stage for a jurisdictional tug-of-war in the Massachusetts case.
From federal detour back to state court
Kalshi initially tried to move the Massachusetts case into federal court, arguing that federal law fully preempts state intervention. A federal judge rejected that gambit, ruling that the lawsuit belonged in state court. As reported in Judge returns Kalshi vs. Massachusetts case to state court, U.S. District Judge Richard G. Stearns found that the company’s “complete preemption” argument did not apply, sending the case back to Suffolk Superior Court and keeping state law claims at the forefront.
That decision preserved the attorney general’s ability to press state gambling allegations without converting the dispute into a federal question. It also ensured a Massachusetts judge would weigh whether Kalshi’s contracts, though overseen by the Commodity Futures Trading Commission, effectively constitute in-state sports betting. The state’s position is spelled out in its complaint, available on the attorney general’s site as the final filed complaint.
The jurisdiction ruling narrowed Kalshi’s immediate options in Massachusetts and foreshadowed a pivotal test of how far federal commodities oversight extends when event contracts look and feel like sports bets. The subsequent injunction request from the attorney general, and the court’s willingness to act on it, reflected that trajectory.
Conflicting outcomes across the map
Massachusetts is not alone. States from Nevada to New Jersey and Tennessee have challenged Kalshi’s sports markets, with decisions cutting both ways and creating a patchwork of rules. In New Jersey, a federal judge sided with Kalshi, restraining state regulators from enforcing a cease-and-desist order while the case proceeds. That interim win, detailed in Federal Judge says Kalshi can continue in New Jersey, bolstered Kalshi’s stance that CFTC oversight can coexist with state systems or supersede them in practice.
The picture is mixed elsewhere. In Tennessee, a federal judge temporarily blocked the state’s attempt to force Kalshi and others to shut down sports event contracts and return customer deposits. The ruling, covered in Federal judge blocks Tennessee’s attempt to halt Kalshi sports event contracts, set a preliminary injunction hearing for Jan. 26 and underscored the judges’ willingness to freeze state actions while testing the federal preemption claims.
Nevada has moved quickly toward a decision with industrywide implications. A district judge there committed to a fast ruling on Kalshi’s challenge to a cease-and-desist order from the Nevada Gaming Control Board, which, along with the Nevada Resort Association, argues Kalshi is providing unregulated sports betting and lacks adequate controls. As outlined in Judge commits to move quickly on Kalshi Nevada judgment, the case also touches on the legality of election-related contracts under Nevada law, expanding the stakes beyond sports.
The divergence across states signals that courts are still sorting out how to draw lines between federally sanctioned event contracts and state-licensed sports betting. Until appellate courts or Congress provide clearer guidance, operators and regulators face uncertainty, and individual rulings can swing access to markets overnight.
Why the Massachusetts ruling matters now
The Massachusetts injunction marks the first time a state court has ordered a CFTC-registered prediction market to halt sports contracts without a gaming license, raising the bar for operators seeking to run such markets under federal derivatives rules. The case’s emphasis on public health, consumer safeguards and tax compliance resonates with broader state concerns that prediction platforms could skirt age limits, deposit caps and responsible gambling mandates applied to sportsbooks.
Those themes were central to the attorney general’s initial lawsuit, as laid out in the complaint coverage, and remain core to the Commonwealth’s position that sports markets require licensure. The office has also signaled a coordinated approach with the Massachusetts Gaming Commission and broader youth protection efforts, including the public-private partnership.
By contrast, federal courts in New Jersey and Tennessee have signaled limits on state reach at early stages, reinforcing Kalshi’s view that CFTC oversight creates a shield for certain activities. The Massachusetts result stands out for rejecting that shield in the state-law context, at least preliminarily, and could influence other jurisdictions weighing similar claims.
What to watch next
Kalshi has said it will appeal in Massachusetts, setting up a test of state supervisory power against federal commodities regulation that could reverberate beyond one platform. Appeals in Massachusetts may proceed in parallel with fast-moving cases in Nevada and continued proceedings in New Jersey and Tennessee, where the Jan. 26 hearing will probe the merits of the state’s position. Outcomes will inform whether prediction markets must silo sports products into licensed sportsbook frameworks or can continue offering event contracts under federal rules.
A ruling that cements state authority could push prediction platforms to seek licenses or curtail sports offerings to avoid enforcement. A wave of federal court wins for Kalshi could, conversely, accelerate adoption of event contracts, with states forced to tailor consumer protection strategies around a federally regulated product. The next phase will hinge on how judges reconcile the Commodity Exchange Act with state gambling statutes and whether courts see sports markets as fundamentally financial products or wagers that belong squarely under state gaming law.
For now, the Massachusetts injunction underscores the costs and complexity of testing that boundary. It also signals that state regulators and attorneys general are prepared to use traditional gambling frameworks to police a fast-evolving market that sits at the intersection of finance, sports and consumer protection.
