A Massachusetts Superior Court judge has raised doubts over whether prediction-market operator Kalshi can legally offer sports-related event contracts in the state, as regulators argue the company is operating an unlicensed wagering product.
The comments came during a hearing in Boston in which the state requested an injunction that would prevent Kalshi from continuing to offer sports prediction markets to Massachusetts residents.
Kalshi allows users to trade on outcomes ranging from politics and economic indicators to sporting events. It launched sports event contracts nationwide in January, prompting several states to challenge whether such markets fall under gambling legislation.
Massachusetts is now the first state to seek a court-ordered pause on Kalshi's sports products. During the hearing, Suffolk County Superior Court Judge Christopher Barry-Smith questioned Kalshi's reliance on federal commodities law, asking how that legal framework could extend to markets based on "something as trivial as who wins a particular game."
Assistant Attorney General Louisa Castrucci told the court that the state's gaming rules apply because "a sports wager by any other name is still a sports wager," arguing that Congress did not intend for the Commodity Futures Trading Commission (CFTC) to regulate betting on sports when it expanded oversight of swaps through the Dodd-Frank Act.
Kalshi's counsel, Grant Mailand, said the company operates under the CFTC's exclusive jurisdiction and that state gaming laws do not apply to exchange-traded event contracts.
He warned that an injunction could be massively disruptive to the market, particularly following Kalshi's recent $1bn fundraising round at an $11bn valuation.
The case follows a setback for the company last month when a federal judge in Nevada ruled that Kalshi's sports contracts fall under that state's gambling regulations because outcomes of sports matches do not meet the federal definition of "events."
Judge Barry-Smith said he expects to issue a ruling in January.
Recent developments in the wider prediction-market sector saw Kalshi secure a $1bn investment round at an $11bn valuation earlier this month, surpassing rival Polymarket for the first time and signalling escalating competition in a sector now drawing heightened legal and regulatory scrutiny across the United States.
Regulators in six states are already in active litigation with Kalshi over the legality of its sports-based prediction markets
