In brief
- A Massachusetts judge allowed state regulators to temporarily ban Kalshi sports prediction markets.
- The preliminary injunction is the first-ever in the U.S. forcing a prediction market to comply with state gambling laws.
- Companies like Kalshi and Polymarket have argued they offer sports event contracts, not sports bets, and should not be regulated at the state level.
A Massachusetts judge ruled Tuesday that state regulators can ban Kalshi from offering sports-related prediction markets—the first-ever order of its kind levied against prediction market platforms in the United States.
For months, state governments have sought to regulate lucrative prediction markets like Kalshi and Polymarket, deeming them sports betting platforms. The companies have pushed back aggressively with lawsuits, arguing they do not offer customers state-regulated sports bets, but instead, event contracts regulated federally by the CFTC.
Though state regulators have notched some early victories against top prediction markets, none had yet compelled a judge to issue a preliminary injunction—a temporary court order forcing a prediction market to stop offering the services in question while the case is being argued.
Today, that changed. Judge Christopher Barry-Smith ruled that Kalshi must comply with a Massachusetts order requiring the company to halt its offering of sports-related wagers in the state, potentially as soon as Friday.
“Prior to March 2025, Kalshi referred to itself in advertisements as ‘the first nationwide legal sports betting platform,’” Barry-Smith wrote Tuesday, justifying the decision. “It now describes itself as a ‘regulated exchange dedicated to trading’ where ‘investments [are] directly tied to the outcome of specific events.’”
“The manner in which Kalshi’s contracts are offered mirrors other digital gambling experiences,” the judge added.
Judges only grant preliminary injunctions in cases where several criteria are met, including a likelihood that the party requesting it is likely to succeed on the merits of its overall case. Massachusetts has argued that sports-related wagers on platforms including Kalshi constitute illegally unregistered sports betting firmly under the state’s jurisdiction.
Sports-related wagers represent over 80% of Kalshi’s total business, according to data from Dune. The company has racked up over $26 billion worth of trading volume on its sports-related markets in barely over a year.
Daniel Wallach, a gaming attorney and leading expert on prediction market regulation in the United States, emphasized the significance of Kalshi’s legal loss Tuesday—and hinted it could lead Massachusetts to quickly notch similar victories against other prediction markets, including Polymarket.
It’s been a rough holiday weekend for prediction markets, even beyond the United States. On Friday, both Portugal and Hungary moved to ban Polymarket, accusing the site of facilitating illegal gambling activity.
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Source: https://decrypt.co/355169/massachusetts-can-ban-kalshi-sports-markets-now-judge-rules
