Judges Skeptical of Kalshi’s Arguments in MA Supreme Court

^{Judges in the state of Massachusetts have been weighing the legality of prediction markets with regards to sports betting. (Photo: Mykhailo Polenok / Alamy)}

A panel of judges questioned whether Kalshi could offer sports-based contracts in the state during a Monday hearing in Massachusetts Supreme Judicial Court.

During oral arguments on Monday, Kalshi and Massachusetts Assistant Attorney General Gerard Cedrone sparred over whether the state could ban prediction markets from offering sports event contracts without a gambling license.

Lawyers Debate Potential Injunction Against Kalshi

The case began in September 2025, when Massachusetts Attorney General Andrea Joy Campbell sued Kalshi, alleging it was offering illegal sports betting without a license from the Massachusetts Gaming Commission. In February, a trial court judge issued a preliminary injunction to stop Kalshi from continuing to offer sports-based markets in the state, though that injunction has been on hold pending an appeal.

The battle in the Massachusetts courtroom echoed those taking place across the country. Attorney Grant Mainland, who is representing Kalshi, argued that only the Commodity Futures Trading Commission (CFTC) has the ability to regulate Kalshi and other prediction markets. The CFTC has exclusive jurisdiction over certain derivatives, including a broadened definition of “swaps” – which is how Kalshi and other prediction platforms classify their event contracts – under the Dodd-Frank Act of 2010.

But state regulators across the country have argued that this authority doesn’t extend to what they say amounts to sports betting. Gambling has generally been regulated by the states, and authorities in many states say that offering moneyline, spread, and totals markets constitutes sports betting – no matter how such markets are presented to users.

“It would be blocking out state regulation of what is in all respects a sports bet,” Cedrone said during the arguments.

Judges See ‘Major Aspect’ of Sports Betting in Prediction Markets

The justices largely appeared to agree with Cedrone, or at least show skepticism towards Kalshi’s counterarguments.

“If you want to gamble on a game, this is one way of doing it, right?” Chief Justice Scott L. Kafker asked a Kalshi lawyer. “This does seem to have a major aspect of sports gambling to it.”

Kafker also noted that the CFTC hadn’t historically supported the interpretation that sports contracts were classified as swaps. While Kalshi and other prediction markets won legal battles to offer political markets in 2024, it wasn’t until the current administration of President Donald Trump that they were able to offer sports bets with the blessing of the federal regulator. Since then, the CFTC has backed the prediction markets, even suing states in an effort to block them from pursuing legal action against the sites.

But not every question was directed at Kalshi’s lawyers, with some judges pointing out ways in which prediction markets differed in some respects from sportsbooks.

“[Kalshi operates] this marketplace where users set odds with each other,” said Justice Serge Georges Jr. “Doesn’t that resemble more of a financial exchange rather than a house-based system?”

So far, Nevada is the only state that has been able to implement a ban on prediction market event contracts. However, legal issues are playing out in several other states, and a bipartisan group of 37 attorneys general filed an amicus brief in favor of Massachusetts in this case.

Given the number of outstanding cases and conflicting rulings, it is highly likely that the issue of jurisdiction over sports event contracts will end up in the Supreme Court of the United States. Legislative solutions are also possible, with two Senators introducing the Prediction Markets Are Gambling Act in March 2026.