- Polymarket is suing Massachusetts in federal court, claiming the state lacks authority to regulate prediction markets as they fall under federal CFTC oversight.
- State courts in Massachusetts and Nevada have moved to temporarily ban sports-related wagers on prediction platforms, arguing they are unlicensed sports betting operations.
- The legal battle has escalated into a state-federal showdown, with CFTC Chair Mike Selig advocating for federal regulation of the markets.
- Major platforms like Kalshi and industry giant Coinbase, which recently launched prediction markets, are now fighting similar state-level regulatory actions.
Polymarket launched a federal lawsuit against Massachusetts on Monday, initiating a direct confrontation with state regulators over the legal jurisdiction governing prediction markets. The platform argues that event contracts, like sports wagers, are under the exclusive purview of the Commodity Futures Trading Commission (CFTC).
However, a Massachusetts judge recently approved a request to temporarily ban rival Kalshi from offering sports markets in the state. Consequently, a court order issued Friday requires Kalshi to geofence Massachusetts users from those markets within 30 days.
This represents a critical first step toward restricting such wagers for American customers on prediction platforms. For months, Polymarket and Kalshi have maintained that their sports-related markets are federally regulated event contracts, not state-level gambling.
Regulators in Massachusetts and Nevada have conversely argued these platforms are unlicensed sportsbooks. “Racing to state court to try to shut down Polymarket U.S. and other prediction markets doesn’t change federal law,” said Polymarket Chief Legal Officer Neal Kumar.
The fight is now a coordinated defense of a business model where sports markets are crucial; data shows they constitute over 80% of Kalshi’s activity. Meanwhile, crypto exchange Coinbase, which launched Kalshi-powered markets last month, has also been targeted by Nevada regulators.
The companies recently gained a federal ally in CFTC Chair Mike Selig, who announced the agency will participate in relevant lawsuits. Selig replied to criticism from Rep. Alexandria Ocasio-Cortez by stating, “CFTC officially back on track.”
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