Massachusetts Supreme Court Signals Skepticism of Kalshi in Oral Arguments Over Sports Betting Ban
The Massachusetts Supreme Court appeared ready to uphold the state’s authority to block Kalshi’s sports-event contracts during oral arguments on Monday.
The highest court in Massachusetts appears unlikely to side with Kalshi. During oral arguments Monday before the Massachusetts Supreme Judicial Court, justices pressed the prediction market platform’s core legal arguments with pointed skepticism, repeatedly questioning whether the distinction between a Kalshi sports-event contract and a traditional sports bet holds up under scrutiny.
The court’s signals suggest it is inclined to uphold the state’s authority to block the platform’s sports contracts, making Massachusetts the second state, after Nevada, to enforce a court-backed ban on Kalshi’s sports offerings.
Justices Challenge the “It’s Not a Bet” Argument
The central question of the hearing was whether Kalshi’s sports-event contracts are meaningfully different from wagering. The justices were unconvinced from the start.
Justice Gabrielle Wolohojian pressed Kalshi’s attorney Grant Mainland directly, asking in what way the platform’s contracts differ from what would colloquially be called a bet. Justice Scott Kafker was more pointed, stating that betting on commodities is clearly covered under existing law and then adding, “If you want to gamble on a game, this is one way to do it.” He returned to the theme later, acknowledging that the platform “does seem to have a major aspect of sports gambling to it.”
Mainland argued that Kalshi operates as a federally regulated financial exchange rather than a sportsbook, citing the platform’s user-to-user trading structure and clearinghouse mechanics as distinguishing features. The justices questioned whether those structural differences change the fundamental nature of what users are doing when they place a contract on the outcome of a sporting event.
The Preemption Wall
Kalshi’s secondary argument, that the CFTC’s exclusive jurisdiction under the Commodity Exchange Act preempts Massachusetts gambling law, fared no better. Kafker told Mainland he was swimming upstream, adding that if Congress had intended to displace state gambling regulation across the board, it would have said so far more clearly and distinctly.
Justice Dalila Argaez Wendlandt reinforced that skepticism, questioning whether the phrase “exclusive jurisdiction” in the federal statute is sufficient on its own to override decades of state gambling authority without more explicit congressional direction.
The preemption question is the central fault line in Kalshi litigation nationally. The Third Circuit Court of Appeals ruled in Kalshi’s favor on this question in New Jersey last month, finding that federal law likely preempts state enforcement against a CFTC-licensed exchange. The Sixth Circuit, by contrast, recently denied Kalshi’s request for an injunction in its Ohio challenge, signaling skepticism of the same argument. Ninth Circuit judges have similarly questioned whether event contracts are meaningfully different from sports betting. Massachusetts now appears ready to add its voice to the skeptical column.
The CFTC Rule 40.11 Problem
A third line of questioning cut directly to Kalshi’s regulatory process. Justice Elizabeth N. Dewar pressed Mainland on whether the company had taken inconsistent positions about whether its contracts involve gaming, asking bluntly: “So I’m confused. Are these contracts involving gaming or not?”
The exchange focused on CFTC Rule 40.11, which prohibits contracts involving gaming that are contrary to the public interest. Mainland argued the rule has two components, whether it involves gaming and whether it is contrary to public interest, and that regulators had never conducted a formal public interest review of sports-related event contracts. His argument was that the absence of CFTC intervention amounts to tacit approval.
Dewar was unpersuaded, emphasizing that the rule states all contracts involving gaming are not allowed and that the lack of a formal CFTC review does not resolve that underlying classification question. The exchange exposed a vulnerability in Kalshi’s self-certification approach that other courts have also flagged.
What the State of Massachusetts Is Arguing
Deputy State Solicitor Gerard Cedrone told the court that accepting Kalshi’s position would block state regulation of what is, in every practical sense, a sports bet. He also pushed back on Kalshi’s effort to classify its contracts as swaps under the Commodity Exchange Act, arguing that a broad interpretation would render key portions of the statutory definition meaningless. The gaming chair in Massachusetts is already on record claiming that prediction markets are targeting bettors under the age of 21. That’s just one more reason for substantial pushback in the state.
Massachusetts has been the most aggressive state regulator in the Kalshi litigation cycle. It was the first state to obtain a preliminary injunction against the platform. An appellate court subsequently issued a stay allowing Kalshi to continue operating while the case proceeds. If the Supreme Judicial Court now upholds the injunction on the merits, that stay falls away, and Kalshi’s sports contracts are blocked in Massachusetts pending any further appeals.
Where This Goes Next
A Massachusetts Supreme Judicial Court ruling against Kalshi would not resolve the national legal question but would deepen the circuit split that is already forming. Three federal circuit courts have now weighed in with divergent conclusions. Two state supreme courts, Nevada’s and now potentially Massachusetts’s, appear inclined to uphold state authority.
The pattern of conflicting rulings across jurisdictions is precisely the condition that pushes cases toward the Supreme Court of the United States. Whether the justices take up the question, and how quickly, depends in part on how many more state and federal courts weigh in before a petition is filed.
For now, the prediction market industry is watching Massachusetts closely. The Supreme Judicial Court’s eventual written ruling will either add to Kalshi’s mounting legal problems or give the platform a lifeline in one of the states that has fought hardest to keep it out.
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