- A Massachusetts judge granted a preliminary injunction against Kalshi, requiring a sports wagering license to offer event contracts in the state.
- The court ruled that federal CFTC oversight does not preempt state gambling laws, allowing state-level regulation of sports-related derivatives.
- The injunction specifically targets new contracts, meaning existing trades held by Massachusetts users are currently unaffected.
A Massachusetts state court is moving to stop Kalshi from offering sports-related event contracts to users in the state unless it obtains a sports wagering licence, in a decision that challenges the company’s claim that federal derivatives oversight shields it from state gambling rules.
Suffolk County Superior Court Judge Christopher Barry-Smith said on Tuesday he will issue a preliminary injunction sought by Attorney General Andrea Joy Campbell. He is expected to finalise the order after a hearing on Friday and will also consider whether to pause it to allow an appeal. Kalshi has previously said it would appeal.
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State Argues Kalshi Runs Unlicensed Gambling Service
The state argues Kalshi is effectively running sports betting “under the guise” of event contracts, without licensing or oversight by the Massachusetts Gaming Commission. It also argues Kalshi is not bound by the state’s under-21 restrictions that apply to licensed operators, meaning 18-year-olds could access a gambling-like product.
Kalshi says its sports contracts fall under the exclusive jurisdiction of the US Commodity Futures Trading Commission because they are exchange-traded derivatives.
Barry-Smith said that view is too broad and that Congress did not intend CFTC regulation to displace state authority over gambling. He wrote that state gambling rules can operate alongside federal commodities oversight.
Massachusetts is the first state to seek an injunction aimed at stopping Kalshi’s sports offerings, and Barry-Smith cited a similar November decision in Nevada, where a federal judge found Kalshi was subject to state gaming rules.
In December last year, Kalshi got hit with a class action suit in New York, filed by seven users over running an unlicensed sports betting house.
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