Massachusetts Supreme Court Ruling on Kalshi Now Imminent — First State High Court Decision on Prediction Markets
The Massachusetts Supreme Judicial Court is expected to rule within weeks on whether Kalshi's sports event contracts constitute illegal sports gambling under state law — the first time any US state supreme court has decided this question. The SJC appeared skeptical of Kalshi's CFTC-preemption argument at May 5 oral arguments. A coalition of 38 state attorneys general backed Massachusetts; the CFTC backed Kalshi. The outcome will be the first state apex court ruling on prediction markets anywhere in the country.
The Massachusetts Supreme Judicial Court — the state's highest court — is expected to rule within weeks on Commonwealth v. KalshiEx LLC (SJC-13906), a case that will produce the first state supreme court decision on prediction markets anywhere in the US. Massachusetts AG Andrea Campbell sued Kalshi in September 2025 (the first state to do so), alleging that sports outcome contracts constitute unlicensed sports wagering. The Superior Court granted a preliminary injunction blocking Kalshi's sports contracts on January 20, 2026. Kalshi appealed directly to the SJC, which took direct review — a step reserved for questions of substantial public importance — and heard oral arguments on May 5, 2026. The court appeared skeptical of Kalshi's core argument that CFTC registration as a designated contract market preempts state gambling enforcement.
For UK readers, the SJC is the Massachusetts equivalent of the Supreme Court of the United Kingdom — the apex court for Massachusetts state law. The SJC's ruling on whether CFTC registration preempts state gambling enforcement will be the first time any US state's highest court has addressed the prediction market question. That matters procedurally: state supreme court decisions are not binding on federal courts, but they create clear precedent within the state, are persuasive authority for other state supreme courts, and can be cited in SCOTUS certiorari petitions as evidence of a multi-forum legal conflict requiring federal resolution. A Gambling Commission equivalent in the UK would already have clear regulatory authority; in the US, the question of whether the commodities regulator or the state gambling regulators have jurisdiction is genuinely unsettled — and Massachusetts may be the first state apex court to answer it.
The amicus positioning at the SJC reflects the breadth of the national conflict. The CFTC filed an amicus brief on April 24 arguing exclusive federal jurisdiction. A coalition of 38 state attorneys general filed an opposing brief on April 28, arguing that CFTC registration does not displace state gambling authority. The 38-state coalition filing against a federal agency position is politically significant: it means that most US states have now taken a formal legal position that CFTC-licensed prediction market operators are subject to state gambling regulation. Combined with the 27-state coalition supporting California tribes in the Ninth Circuit, a clear majority of US states have signed formal legal briefs in the prediction market litigation in 2026.
The SJC's decision timing is significant given the surrounding legal calendar. New Jersey files its SCOTUS certiorari petition on September 3, citing the Third Circuit / Ninth Circuit split. The NFL regular season opens September 4, generating billions in prediction market sports volume. The Ninth Circuit's August 28 ruling provides the SJC with authoritative federal appellate support for the state's position — the SJC can cite a unanimous Ninth Circuit panel as evidence that the federal court system has not uniformly accepted Kalshi's preemption argument. If the SJC rules against Kalshi, it adds a state supreme court to the list of courts that have rejected CFTC-preemption claims. If it rules for Kalshi, it creates an unusual pro-platform ruling at the state apex level while every federal district court except the Third Circuit has ruled the other way. Either outcome sharpens the case for SCOTUS review.
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Recent updates
CFTC Chair Says Agency Is Watching Prediction Markets for Manipulation Ahead of Midterms
CFTC Chairman Michael Selig said on October 23 that the agency is closely monitoring prediction markets for manipulation ahead of the November 3 midterms, and that it is separately scrutinising oil market trading tied to President Trump's announcements about the war in Iran. Combined midterm open interest on Kalshi and Polymarket stood at $250 million as of October 18, with Kalshi holding 84%. Selig acknowledged the agency often catches political figures trading 'oftentimes after the fact.' The remarks highlight the CFTC's dual role as both the platforms' federal protector and their manipulation watchdog.
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US Defense Secretary Pete Hegseth issued an October 20 memo barring Department of Defense personnel from making financial transactions using non-public information, explicitly naming Polymarket and Kalshi. The directive follows the prosecution of a Special Forces soldier accused of making more than $400,000 on Polymarket by betting on a mission to capture Venezuelan President Nicolas Maduro. Hegseth's rationale is a national-security concern: a bet on a military outcome creates a market signal adversaries can read. 'Our enemies watch movements in these markets,' the memo states.
Crypto.com and Novig Sue Missouri as Market Leaders Hold Back — Eighth Circuit Now in Play via Iowa
Crypto.com and Novig filed federal lawsuits on October 16 challenging Missouri's cease-and-desist orders, arguing their sports event contracts fall under exclusive CFTC jurisdiction. The suits came as Missouri's 30-day compliance window closed. Notably, the market leaders — Kalshi, Polymarket, Robinhood, and Underdog — have not sued; Missouri said it is in 'ongoing discussions' with Kalshi. The outcome is tied to the Eighth Circuit, now weighing the same question in Kalshi's Iowa appeal — the fourth federal circuit to take up the prediction market question.