A Massachusetts superior court judge is preparing to order the prediction market platform Kalshi to stop offering sports-related contracts to users in the state, siding with regulators who argue the activity violates local sports-betting laws. Superior Court Justice Christopher Barry-Smith indicated in a ruling that the court is moving toward issuing a preliminary injunction that would prohibit Kalshi from operating its online sports contracts in Massachusetts without the appropriate license. The judge said the state is required to submit a narrowly tailored injunction proposal that avoids disrupting existing contracts, after which Kalshi will have an opportunity to respond. Under the current timeline, the court is expected to order the halt by the end of the week, although procedural delays or temporary stays remain possible.
The case stems from a lawsuit filed by Massachusetts authorities last year, which argues that Kalshi’s binary sports contracts function as unlicensed sports wagering under state law. Regulators maintain that while Kalshi is registered at the federal level as a derivatives exchange, that status does not exempt the company from complying with state-specific sports-betting regulations. In his ruling, the judge stated that requiring Kalshi to obtain the proper license to offer sports-related contracts serves the public interest, signaling agreement with the state’s legal interpretation. The court’s approach seeks to balance enforcement with consumer protection by ensuring that existing users are not abruptly harmed while regulatory clarity is established.
The dispute highlights ongoing tension between emerging prediction markets and traditional gambling frameworks in the United States. Platforms like Kalshi argue that their contracts are financial instruments tied to event outcomes rather than conventional bets, placing them under federal commodities oversight. State regulators, however, have increasingly challenged that distinction when contracts closely resemble sports wagering offered by licensed sportsbooks. A forced suspension in Massachusetts could influence how other states assess similar products and may prompt broader scrutiny of prediction markets operating across multiple jurisdictions. The outcome is being closely watched by market participants as a potential precedent for how state and federal authority intersect in the regulation of event-based financial contracts.
