Massachusetts Intensifies Opposition to Prediction Markets
Legal Challenges Mount Against Prediction Markets in Massachusetts
Suffolk County Superior Court Judge Christopher Barry-Smith has recently raised concerns about the legality of prediction market platforms like Kalshi operating within Massachusetts. His scrutiny adds to ongoing debates about whether these platforms are permissible under the state’s laws.
State Pushes for Injunction Against Kalshi
Judge Barry-Smith argued that Kalshi’s offerings amount to unlicensed sports betting and pointed out the risk of exposing potentially addictive products to individuals as young as 18. This viewpoint aligns with Massachusetts’ efforts to obtain an injunction to halt Kalshi’s services, which the state classifies as unregulated gambling.
While several regulated companies such as DraftKings, FanDuel, and Fanatics have entered the prediction market space, Massachusetts remains staunchly opposed to Kalshi’s operations.
In response, Kalshi asserts that it operates under the oversight of the Commodity Futures Trading Commission (CFTC) and emphasizes that its products are financial contracts rather than traditional sports bets. Kalshi’s attorney, Grant Mailand, reiterated this position before the court, highlighting the differences between sports event contracts and conventional sports gambling under federal regulations.
However, Judge Barry-Smith expressed skepticism about this distinction, suggesting that for most people, Kalshi’s offerings closely resemble sports betting. The judge indicated that categorizing these contracts as gambling would render them illegal under state law, while accepting the CFTC’s regulatory authority could indirectly permit sports betting products disguised as financial contracts.
Assistant Attorney General Louisa Castrucci added that the CFTC’s original mandate from Congress focused on preventing financial crises like the one in 2008, not authorizing sports betting activities.
Opposition Spreads Beyond Massachusetts
Kalshi’s legal battles are not confined to Massachusetts. A recent decision in Nevada presents similar challenges, with concerns growing that Kalshi’s scope could extend beyond sports contracts to other types of bets. A Nevada judge reviewed Kalshi’s arguments regarding the distinction between event contracts and sports betting but concluded that, under federal law, sports matches cannot be classified simply as events for regulatory purposes.
As this legal conflict continues, it appears increasingly likely that Kalshi will need to appeal to the United States Supreme Court for a definitive ruling.
Despite the regulatory pressure, Kalshi has gained mainstream exposure, recently partnering with major news outlets such as CNN and CNBC to provide prediction market data, signaling growing acceptance and interest in their platform outside legal disputes.
