Polymarket is suing Massachusetts to stop the state from limiting its sports prediction markets. This legal battle comes as regulators crack down, already forcing Kalshi, a competitor, to block Massachusetts users.
Legal Fight Looms as Polymarket Moves to Block Massachusetts Enforcement
On Monday, Polymarket filed a lawsuit in the US District Court for the District of Massachusetts. The suit names Attorney General Andrea Campbell and state gaming officials as defendants, as reported by Bloomberg Law. Polymarket claims Massachusetts cannot regulate or ban its contracts because the platform operates under federal oversight. The lawsuit argues that the Commodity Futures Trading Commission (CFTC) has sole control over prediction markets through the Commodity Exchange Act, leaving no room for state gambling laws.
Polymarket argues that the risk of enforcement is now real. The company points to recent court rulings against Kalshi as proof that a similar action might happen to it soon. Such a move, it says, would upset its business, break up a nationwide market into state-level parts, and make the company choose between giving in to what it sees as illegal state pressure or giving up rights granted by federal law.
The legal status of sports prediction contracts is at the heart of the argument. Polymarket claims these products work as financial tools regulated by federal law, even if they look like betting. The company says Congress gave the CFTC the power to decide if such contracts should be allowed. Polymarket argues that since the regulator has not banned them, they should be able to run nationwide.
Prediction Markets Hit Roadblocks as States Assert Gambling Authority
The case adds to a series of failures for prediction market platforms in Massachusetts. The previous week, a state judge denied Kalshi’s request to suspend an earlier decision that forces it to block users from Massachusetts while it appeals. The court decided that Kalshi’s sports contracts were subject to state gambling laws and needed a license to operate. It dismissed claims that federal oversight alone was enough. In Nevada, a similar ruling refused to shield Coinbase from state action related to comparable products.
So far, Massachusetts courts have stressed that Congress did not mean to override traditional state powers over gambling. Judges have called claims of federal preemption too broad and have highlighted the state’s stake in protecting consumers and enforcing licensing rules.
Polymarket’s lawyers argue that letting states control CFTC-watched markets would hurt the idea of standard national exchanges. The company wants the court to say state gambling laws do not apply to its work and to stop enforcement against the platform.
In public statements, Polymarket’s top lawyer said the lawsuit aims to protect users and keep prediction markets going. He added that state crackdowns might hold back innovation. The case joins other lawsuits that could affect how prediction markets are controlled across the country. Massachusetts is becoming a key place to test the debate about federal versus state power.
