Polymarket Sues Massachusetts Over Sports Prediction Ban

Polymarket has filed a federal lawsuit against Massachusetts, aiming to block the state from enforcing its gambling laws on sports prediction markets.

Key Takeaways

• Polymarket is challenging Massachusetts’ efforts to regulate its sports prediction markets, arguing that federal law gives sole authority to the U.S. Commodity Futures Trading Commission (CFTC).
• The lawsuit follows a Massachusetts court ruling against rival platform Kalshi, which was barred from offering sports contracts without a state gaming license.
• State regulators in Nevada and Massachusetts are pushing back against event contract platforms, prompting a broader legal battle over state versus federal oversight.
• Polymarket warns that enforcement would cause irreparable harm, disrupting its operations, fragmenting national markets, and threatening user trust.

What Happened?

Polymarket sued Massachusetts Attorney General Andrea Joy Campbell and state gaming regulators in federal court. The company argues that its contracts are federally regulated derivatives overseen by the CFTC and should not be subject to state gambling laws. The legal action comes after a Massachusetts judge ruled against Kalshi, a similar platform, and denied its request to delay enforcement while it appeals.

The Legal Battle Over Prediction Markets

The lawsuit represents a growing confrontation between prediction market platforms and state authorities over who has the right to regulate sports-related event contracts.

Polymarket’s complaint emphasizes the federal nature of its operations, stating that CFTC authority preempts state-level interference. The company warned that state enforcement would:

• Disrupt its platform and user experience.
• Fragment liquidity across state lines.
• Harm banking and commercial partnerships.
• Undermine trust among participants.

Polymarket’s Chief Legal Officer Neal Kumar wrote on X that “Congress gave the CFTC, not states, exclusive authority over event contracts.” He stressed that the markets are national in scope and that “critical questions must be resolved in federal court.”

The lawsuit comes in response to a string of state-level crackdowns:

• In Massachusetts, a judge ruled that Kalshi’s sports contracts qualify as unlicensed gambling and must stop offering them to state residents.
• The court denied Kalshi’s request to pause the order, forcing the platform to comply within 30 days.
• In Nevada, state regulators have also taken action against Kalshi, Polymarket, and even Coinbase over similar offerings.
• A federal court in Tennessee temporarily blocked enforcement against Kalshi, reflecting the ongoing jurisdictional uncertainty.

A Pushback Against State Crackdowns

Polymarket believes that states are trying to shut down legally compliant federal markets under the guise of local gambling laws. In its filing, the company claims Massachusetts is creating an “immediate and concrete” enforcement threat, following its actions against Kalshi.

Polymarket said it hopes to avoid “imminent and irreparable harm” from what it sees as a violation of federal law. The company is represented by Gibson Dunn & Crutcher LLP and Mintz Levin Cohn Ferris Glovsky & Popeo PC.

Kumar posted that Massachusetts and Nevada “will miss an amazing opportunity to help build markets for tomorrow” and reiterated that Polymarket is fighting “for the users.”

The lawsuit also pointed to recent remarks from CFTC Chairman Michael Selig, who signaled a potential shift in the agency’s stance. Selig urged the commission to reconsider how it intervenes in legal disputes concerning its jurisdiction and filed an amicus brief in a similar case involving Crypto.com.

CoinLaw’s Takeaway

This case could be a turning point for the future of prediction markets in the U.S. I’ve followed this space closely, and what we’re seeing here is a classic federal vs. state clash playing out in real time. In my experience, when federal agencies like the CFTC start signaling support, it’s usually a green light for the industry. But states aren’t backing down, and their courts have teeth. If Massachusetts succeeds, other states may feel empowered to shut down federally-regulated platforms. But if Polymarket wins, it could open the floodgates for a more unified, national market for event-based trading. Either way, this lawsuit is worth watching closely.

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