Polymarket Makes Move Against Massachusetts, Says States Can’t Override Federal Oversight

• Polymarket filed a federal lawsuit against Massachusetts, arguing the CFTC has exclusive authority over event contracts and that state interference would cause “irreparable harm” to national markets.
• The legal strike follows a Massachusetts judge’s recent order forcing rival platform Kalshi to geofence state residents after its sports contracts were labeled “unlicensed gambling.”
• As similar battles unfold in Nevada and Tennessee, the case will determine if prediction markets operate under a single federal framework or a patchwork of state-level gambling laws.

Prediction market giant Polymarket has officially filed a federal lawsuit against Massachusetts Attorney General Andrea Joy Campbell and state gaming regulators.

The suit argues the state cannot move to shut down the platform because Congress gave the Commodity Futures Trading Commission (CFTC) exclusive authority over federally regulated “event contracts”.

As Crypto News Australia reported, Polymarket received CFTC approval in late 2025 to offer regulated, intermediated trading in the US, after a settlement that included a US$1.4 million (AU$2.14 million) penalty tied to earlier unregistered activity.

Related: Prediction Market Kalshi Hit With Class Action Alleging Illegal Sports Betting and Rigged Market-Making

Polymarket’s Legal Struggles in Massachusetts

Neal Kumar, Polymarket’s chief legal officer, said on Monday the dispute concerns national markets and open legal questions that should be decided in federal court, not through state enforcement actions, and that Massachusetts law enforcement would cause “irreparable harm” by fragmenting a national market and disrupting operations. 

Kumar also pointed to similar actions in Nevada, where both Kalshi and Polymarket are facing state challenges as the court rejected federal preemption arguments and ordered geoblocking or shutdowns. 

The CFTC is also reassessing how active it should be in these disputes, with Chair Michael Selig signaling possible support through amicus briefs or intervention as the issue moves through higher courts.

A few days ago, a state judge ruled Kalshi’s sports event contracts require a state gambling license, denied a request to pause the ruling, and set a 30-day period for the platform to geofence users in Massachusetts while it appeals. 

Kalshi argues its CFTC-regulated event contracts are derivatives, not gambling, and says it will continue to fight the ruling. Sports contracts are now the largest share of Kalshi’s volume, making the restrictions material.

Read more: Bitcoin Slump Hits Saylor’s Strategy at the Worst Possible Moment

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