Polymarket Challenges State Control of Event Trading

• Polymarket argues Massachusetts lacks authority, saying prediction markets fall under federal oversight.
• Kalshi court ruling heightens enforcement risk, prompting broader legal action across prediction platforms.
• Jurisdiction disputes widen as CFTC signals review while states press gambling law enforcement.

Polymarket has filed a federal lawsuit seeking to block Massachusetts officials from enforcing state gambling laws against its prediction markets, arguing that the contracts fall under federal jurisdiction. 

The legal action targets the authority of Massachusetts regulators to oversee platforms that allow users to trade on real-world events, including sports. Polymarket contends that state-level intervention would disrupt its nationwide operations and create inconsistent rules for users across the country.

The complaint names Massachusetts Attorney General Andrea Campbell and state gaming regulators, asserting that the threat of enforcement is immediate. According to the filing, recent court decisions involving rival platforms heightened the risk of similar action against Polymarket.

Polymarket Lawsuit Follows Kalshi Ruling

The lawsuit arrives shortly after a Massachusetts state court ordered a temporary halt to Kalshi’s sports-related contracts within the state. In the Kalshi case, the court refused to pause enforcement during the dispute, ruling that the platform must comply with local gaming statutes. Kalshi appealed the decision but failed to secure a stay, leaving it with 30 days to block Massachusetts users from accessing sports markets.

Polymarket argues that the Kalshi ruling signals a broader push by states to regulate prediction markets as gambling, even when the products operate nationwide.

Federal Oversight at The Center of Dispute

At the core of the Polymarket lawsuit is the question of regulatory authority. The company maintains that its event contracts fall under the supervision of the Commodity Futures Trading Commission, which oversees derivatives and certain prediction products at the federal level. Polymarket says this federal framework blocks state gambling laws.

The filing references comments made on Jan. 29 by Michael Selig, who said the agency would reassess how it handles cases testing the limits of its jurisdiction. Soon after, the CFTC submitted an amicus brief in a related lawsuit involving Crypto.com, indicating a more active role in disputes over regulatory reach.

Massachusetts is not the only state involved in similar conflicts. A federal judge in Nevada recently rejected Coinbase’s request to block enforcement related to event-based trading products. Meanwhile, Robinhood, which partners with Kalshi, has sought its own injunction in Massachusetts to avoid state licensing requirements.

Related: Polymarket Takes on Kalshi With Free NYC Grocery Store