Massachusetts Prediction Markets: The Supreme Judicial Court Showdown Over Sports Event Contracts

Sports prediction markets are not available to Massachusetts residents right now, but other event contracts are. That split is the whole story. The Commonwealth argued in court that Kalshi’s game-outcome, point-spread, and over-under contracts are sports wagering by another name, and a judge agreed enough to shut them off pending trial. Contracts that have nothing to do with sports — a Federal Reserve rate decision, a weather threshold, an election result — were never named in that order and generally still load for someone in Boston or Worcester.

Why “blocked” rather than “banned” is the precise word here matters. Massachusetts never passed a statute outlawing prediction markets. There is no felony provision, no legislative prohibition of the kind Minnesota briefly enacted. What exists is a civil enforcement action built on an existing law — the state’s 2022 sports wagering statute, General Laws Chapter 23N — and a preliminary injunction that flows from it. The Attorney General’s theory is that anyone taking sports wagers in Massachusetts needs a Gaming Commission license, that Kalshi has none, and that its federal registration as a commodities exchange does not exempt it from that requirement. Kalshi’s answer is that its contracts are federally regulated swaps and that Congress handed exclusive authority over such instruments to the CFTC, leaving no room for a state licensing regime to touch them. A Suffolk judge sided with the state on likelihood of success; the SJC will now decide whether that reasoning holds. Until it rules, the block stands.

Kalshi began listing sports event contracts nationwide in January 2025, and Massachusetts did not wait for federal appellate courts to sort out the preemption question before acting. Attorney General Campbell moved directly, filing suit in Suffolk County Superior Court in September 2025 and alleging that the exchange was running unlicensed sports wagering in the Commonwealth. The complaint leaned on the practical realities of the product: contracts priced on who wins a game, by how much, and whether the total lands over or under a number are functionally identical to a sportsbook ticket, the state said, and offering them without a Gaming Commission license violates Chapter 23N.

Regulators reinforced the litigation on a second front. In November 2025, the Massachusetts Gaming Commission notified its licensed sportsbook operators that they may not offer sports-related event contracts in the Commonwealth, whether directly or through an affiliated entity. That single administrative notice is the reason DraftKings Predict and FanDuel Predicts, both of which launched sports contracts in other states in December 2025, never switched them on for Massachusetts. Companies that already hold a valuable state betting license were not about to jeopardize it by testing an unsettled federal theory.

The decisive step came at the start of 2026. On January 20, 2026, Suffolk Superior Court Judge Christopher K. Barry-Smith granted the Attorney General’s motion for a preliminary injunction, with the order taking effect at noon on January 23. It barred Kalshi from offering sports event contracts to Massachusetts residents absent a state license. National coverage flagged it immediately as the first order of its kind — a state court, not a legislature, switching off a CFTC-registered exchange’s marquee product. Bloomberg Law’s headline captured the moment plainly: Kalshi’s sports wagering was to be banned in Massachusetts, the court said.

The reasoning in the Suffolk order is worth understanding, because the SJC is now reviewing exactly this analysis. Barry-Smith did not treat the case as a close call on likelihood of success. He required Kalshi to show clear congressional intent to displace the state’s authority to regulate sports gambling through the Commodity Exchange Act, and he found the company had not done so. The CEA, the court reasoned, hands the CFTC exclusive jurisdiction over derivatives markets — but not over a state’s gambling police powers, which sit in a different lane entirely.

Peeling apart the statute, the court pointed to the CEA’s own structure — its special rule for certain event contracts, its express preemption language, and its savings clauses — as evidence that Congress did not intend to sweep away every state law that might touch a listed contract. A Massachusetts licensing requirement, in the court’s view, neither displaced federal derivatives regulation nor frustrated any federal purpose; an operator could hold a state license and comply with CFTC rules at the same time. On that basis the court rejected Kalshi’s conflict-preemption argument as well. Because Kalshi is a Massachusetts defendant in a Massachusetts court applying Massachusetts law, it could not simply remove the case to federal court; its route out ran through the state appellate system. The injunction, notably, was not stayed pending that appeal, which is why the block has stayed live throughout 2026.

Two arms of Massachusetts government are working the same problem from different angles, and it helps to keep them straight. The Attorney General runs the litigation — the lawsuit, the injunction, the SJC appeal. The Massachusetts Gaming Commission, the five-member body that licenses and polices casinos and sportsbooks under Chapter 23N, handles the regulatory side. Its November 2025 notice to licensees was not a court order and carried no penalty of its own; it was a warning to the companies the Commission controls that offering sports event contracts, directly or through an affiliate, would put their state licenses in jeopardy.

That distinction explains an otherwise puzzling pattern. DraftKings and FanDuel launched sports-contract products nationally in December 2025 yet pointedly kept them dark in Massachusetts, even though the Suffolk injunction named only Kalshi. The reason is leverage: a company holding a Massachusetts sportsbook license has far more to lose than a pure-play exchange with no state license to protect. The Commission does not need to win a preemption fight to keep its own licensees in line — it simply reminds them what a license is worth. Kalshi, holding no Massachusetts license, is beyond that lever, which is exactly why it, and not the big sportsbook brands, ended up as the named defendant testing the state’s authority in court.

Rather than route the appeal through the intermediate Appeals Court, where it was briefly docketed as No. 2026-P-244, the SJC granted direct appellate review and pulled the case straight onto its own docket as No. SJC-13906. That decision alone signaled how significant the court considered the question. Direct review is reserved for matters of broad public importance, and a fight over whether a state can regulate what functions as sports betting on a federally licensed exchange clearly qualified.

The briefing turned into a national event. On April 24, 2026, the CFTC filed an amicus brief with the SJC asserting that the Commodity Exchange Act gives it sole authority over event contracts and warning that letting Massachusetts win would splinter a nationally traded instrument into fifty different state rulebooks. On that very same day, a coalition of 38 state attorneys general filed on the opposite side, backing the Commonwealth’s argument that states retain the power to police what they view as unlicensed sports wagering. The alignment was striking: the federal government’s own market regulator squared off against most of the country’s chief law-enforcement officers in a single state courtroom.

Oral argument took place on Monday, May 4, 2026 — the first occasion any state high court had confronted the prediction-market preemption question head on. Deputy state solicitor Gerard Cedrone argued for the Commonwealth; Grant Mainland appeared for Kalshi. Several justices sounded openly skeptical of the company’s framing. Justice Scott Kafker cut to the everyday reality, observing that for a person who wants to bet on a game, the platform “is a way of betting on a game.” Justice Gabrielle Wolohojian suggested the contracts “would not be conceptually incompatible with what we historically understand to be a bet or a wager.” Justice Serge Georges Jr. pressed on whether Kalshi behaves more like a financial exchange than a sportsbook, and Justice Elizabeth Dewar raised the practical headache of subjecting a federally regulated market to fifty separate state regimes. Trade coverage described Kalshi as “swimming upstream” by the end of the session.

The state’s case is not airtight, and it is fair to say so. The justices did not spare Cedrone, and Kalshi has a genuine argument that Congress gave the CFTC exclusive jurisdiction over instruments traded on a designated contract market, full stop, regardless of what the underlying event is. That is precisely the reading a divided Third Circuit adopted in the New Jersey case. Dewar’s fifty-rulebooks concern is the strongest card the company holds: if every state can license or ban the same nationally listed contract, the market fragments in a way federal commodities law was designed to prevent. So while the tenor of argument leaned toward the Commonwealth, a ruling for Kalshi is entirely plausible, and the court gave no firm timeline. As of August 2, 2026, no decision had issued; a ruling within roughly four months of argument would land around early September.

Kalshi is not the only exchange fighting Massachusetts. On February 9, 2026, Polymarket opened a second front by suing Attorney General Campbell and the Massachusetts Gaming Commission in federal court, seeking preliminary and permanent injunctions to stop the state from enforcing its gambling laws against the exchange. Polymarket’s complaint made the mirror-image argument to the state’s: Congress vested the CFTC with exclusive control over event contracts, and the Suffolk injunction against Kalshi was itself evidence of the imminent, irreparable harm Polymarket faced. The filing was plainly coordinated in spirit with Kalshi’s defense and tracks the parallel challenges Polymarket has brought against other states that moved against it, including Michigan and New Mexico. That federal case remained pending as of August 2, 2026, running alongside the SJC appeal rather than being consolidated with it.

Massachusetts is not deciding this in a vacuum, and the surrounding federal picture cuts in both directions. Six weeks before the SJC heard argument, the Third Circuit handed the industry its biggest win to date. On April 6, 2026, that court ruled 2-1 in KalshiEX LLC v. Flaherty, No. 25-1922, that sports event contracts are swaps under the Commodity Exchange Act and that the CEA preempts New Jersey’s gambling laws as applied to those contracts on a CFTC-registered exchange. Judge David Porter wrote the majority; Judge Jane Roth dissented, arguing that Kalshi’s products are virtually indistinguishable from sportsbook offerings and that a presumption against preemption should govern given the long history of state gambling regulation. That dissent reads almost like a preview of the Commonwealth’s SJC brief.

Elsewhere the platforms have fared worse. A federal judge in Arizona went furthest of anyone against them: after Attorney General Kris Mayes brought a rare criminal information, the court on May 5, 2026 converted a temporary restraining order into a permanent injunction, the first district-level merits ruling that federal law does not shield these contracts. New York denied Kalshi a preliminary injunction, and Attorney General Letitia James filed a state-court petition on July 31, 2026 seeking penalties that news outlets suggested could reach into the billions. Ohio, Michigan, and Washington have all produced adverse rulings for Kalshi. Meanwhile Tennessee cut the other way, where a federal judge found the contracts likely to be CFTC-regulated swaps. The most-watched piece is the Ninth Circuit, which heard consolidated appeals out of Nevada in April 2026 and, as of early August, had not ruled; a decision for Nevada would create a clean circuit split and make U.S. Supreme Court review close to inevitable. A Massachusetts ruling for the Commonwealth would deepen that split from the state-court side, adding weight to whatever petition eventually reaches Washington. New Jersey, for its part, has until September 2026 to ask the Supreme Court to take the Flaherty case.

Because the injunction targets a product category rather than an entire company, the on-the-ground picture is more granular than a simple on-or-off switch. Here is where each platform we review stands for a Massachusetts resident as of August 2, 2026. No operator is lawfully offering sports event contracts to Massachusetts residents while the SJC case is live — these cards are for information only, not sign-up prompts.

The clean takeaway: no operator is lawfully offering sports event contracts to Massachusetts residents while the SJC case is live. Any site that appears to let you trade a Red Sox, Celtics, Bruins, or Patriots outcome from a Massachusetts address is either routing around the block or working from stale information. For the national who-lists-what picture, our prediction markets hub tracks every platform, and our guide to whether online gambling is legal puts this vertical in context with the rest of state gambling law.

Understanding why this fight is even close requires understanding the product. A prediction market is not a sportsbook in the mechanical sense. On a traditional betting app the operator sets the odds, takes the other side of your wager, and profits from the built-in margin — you are betting against the house. On an exchange like Kalshi you are buying and selling a contract against other traders, with the platform matching orders and taking a fee rather than a position. Each contract is a yes-or-no claim on a future event — will a given team win, will inflation top a threshold — and it settles at one dollar if the answer is yes and zero if no.

Prices move between one cent and ninety-nine cents and read as implied probabilities. A contract trading at 62 cents reflects a roughly 62 percent market-implied chance the event happens. You can buy the yes side or the no side, close a position before the event resolves by selling into the order book, or hold to settlement. That order-book structure is the heart of Kalshi’s legal argument: it says a peer-to-peer market where participants set prices is a derivatives exchange, categorically different from a bookmaker quoting a line. The Commonwealth’s rejoinder is that from the resident’s chair, clicking “yes” on the Celtics to win is a bet regardless of the plumbing behind it — a point Justice Kafker pressed at argument. Both descriptions are accurate; which one controls the law is the entire dispute.

For a Massachusetts resident today, that mechanism still functions for the categories the injunction never touched. Someone in the Commonwealth can typically load Kalshi and trade a contract on whether the Federal Reserve cuts rates at its next meeting, whether a named storm makes landfall by a date, or how an election or awards outcome resolves. The trade works the same way — buy yes or no, watch the price, settle at a dollar or zero — and the fees and order book are identical to the sports markets that are switched off. What a resident cannot do is trade the game-outcome, spread, and total contracts that the Attorney General persuaded a judge look and function like the sportsbook wagers Chapter 23N reserves to licensed operators. The line the litigation draws is a line between contract categories, not between platforms, and that is why the same app behaves differently depending on which market you open.

For a Massachusetts resident who simply wants to bet on a game legally, the settled path is the regulated sportsbook, not the event-contract exchange. Massachusetts legalized sports wagering under Chapter 23N in 2022, retail books opened at the casinos in January 2023, and licensed mobile apps went live in March 2023. Today DraftKings, FanDuel, BetMGM, Caesars, Fanatics, and other operators run under Gaming Commission licenses, offering the full menu of moneylines, spreads, totals, parlays, and live betting with the state’s consumer protections built in.

The practical differences for a resident are real. A licensed sportsbook operates under a 21-and-over age floor, a statewide self-exclusion program, a state complaint and dispute channel, and responsible-gaming requirements the Gaming Commission enforces. A CFTC-regulated exchange offers none of those state-supervised protections, and Kalshi’s minimum age is 18. There are also product differences — exchanges let you sell out of a position mid-event and price contracts as probabilities, which some traders prefer — but for straightforward sports betting the licensed apps are the compliant option and the one the state is steering residents toward. Our Massachusetts online sportsbooks page lists the current licensed operators; the states with online sportsbooks tracker shows where mobile betting is live nationally, and the broader online sportsbooks hub covers how to evaluate them.

Strip away the preemption vocabulary and much of the Commonwealth’s case is about safeguards. Massachusetts built a specific set of protections into its sports-betting law, and its argument is that federally regulated exchanges sit outside every one of them. The age difference is the sharpest example and the one the Attorney General has emphasized repeatedly: Massachusetts requires bettors to be 21, while Kalshi admits traders at 18. A licensed book must honor the state’s self-exclusion registry, so a resident who bars themselves stays barred across every operator; an event-contract exchange has no connection to that list. If a dispute arises, a sportsbook customer can complain to the Gaming Commission; an exchange customer has no state channel and must look to the CFTC, which supervises market integrity rather than individual-player disputes.

Funds are a related worry. When a state forces an exchange to stop serving residents, operators have generally allowed users to unwind open positions and cash out their balances, and some orders have required it — but there is no state-guaranteed process the way there is for a licensed operator. It is worth noting the one genuine exception in the sector: FanDuel Predicts was built compliance-first, shipping deposit limits, deposit alerts, self-exclusion, and mental-health support through a behavioral-health partner. That structure is the closest an event-contract product has come to matching state safeguards, and it is part of why FanDuel keeps its sports contracts out of licensed-sportsbook states like Massachusetts in the first place.

Taxes are an underappreciated wrinkle, and the honest answer is that the treatment is unsettled — this is general information, not tax advice. The IRS has drawn no bright line for event contracts, and Kalshi provides no 1099-B, so whether a payout is gambling income, a capital gain or Section 1256 futures income is left to the filer. A brokerage-distributed contract may be reported differently from an exchange-native one, so the platform matters. Whatever the federal characterization, Massachusetts taxes residents’ gambling and investment income at the state level, and a resident with realized gains should keep their own records and consult a professional rather than assume a form will arrive. Because sports contracts are blocked here anyway, the near-term tax question mostly concerns non-sports markets that remain accessible.

Set against the roughly two dozen states now tangling with prediction markets, Massachusetts occupies a distinct spot. It did not pass a ban the way Minnesota did before a federal judge blocked that law in July 2026. It did not bring criminal charges the way Arizona did. And it did not, like New York, chase enormous monetary penalties. Instead the Commonwealth ran a clean, early civil enforcement play — file first in state court, frame the dispute around gambling police powers, win a preliminary injunction, and escalate straight to the state’s highest court. That strategy kept the case out of a federal forum that has often been friendlier to the platforms and put the preemption question in front of judges applying Massachusetts law.

New England itself is not of one mind, which raises the stakes for a regional precedent. Connecticut moved early, sending cease-and-desist letters to Kalshi, Polymarket, and Crypto.com in December 2025 before a federal judge temporarily blocked enforcement and the CFTC sued the state in April 2026. Rhode Island has a live matter of its own and is among the states the CFTC has taken to court. That patchwork on Massachusetts’s borders is exactly the fragmentation the CFTC warned the SJC about — a resident could, in theory, face different rules driving from Boston to Providence to Hartford — and it is also why a definitive answer from the region’s most influential court would carry weight well beyond the Commonwealth.

The company Massachusetts keeps tells you which way its bench leans. The 38-state coalition backing the Commonwealth at the SJC includes most of the states that have moved against the platforms, and the alignment mirrors the broader amicus wave, in which more than 34 states plus the District of Columbia have asserted state authority in the federal cases. Nearby states are watching for their own reasons: a Massachusetts ruling for the state would give New England neighbors a template, while a ruling for Kalshi would hand the industry a marquee state-court precedent to wave at every other attorney general. For a state-by-state comparison across products, our state gambling index is the starting point, and the Massachusetts gambling sites overview covers everything legal in the Commonwealth beyond this one dispute.

Several developments could reshape this page on short notice. The nearest is the SJC’s own decision in No. SJC-13906, which could arrive any week and will be the first state-high-court answer on prediction-market preemption. If the court rules for the Commonwealth, the block hardens and the Third Circuit split sharpens; if it rules for Kalshi, the Suffolk injunction likely dissolves and sports contracts could return to Massachusetts. Polymarket’s federal suit against Attorney General Campbell is a separate track that could produce its own ruling. Nationally, the Ninth Circuit’s pending Nevada decision, New Jersey’s expected certiorari petition, and any move by the CFTC to finalize its event-contract rule all feed back into how a Massachusetts court reads the federal landscape. There is also a wildcard in Congress: a bipartisan bill styled the Prediction Markets Are Gambling Act would stop CFTC exchanges from listing sports and casino-style markets, and if it ever passed it would moot this entire dispute. None of those is resolved as of August 2, 2026.

• Commonwealth of Massachusetts v. KalshiEx LLC, No. SJC-13906 (Massachusetts Supreme Judicial Court); Appeals Court No. 2026-P-244. Docket via the Massachusetts Appellate Courts public case search (ma-appellatecourts.org).
• Suffolk County Superior Court preliminary injunction, Judge Christopher K. Barry-Smith, granted January 20, 2026 (effective January 23, 2026).
• Massachusetts Attorney General’s Office press release, “AG Campbell Secures Court Order That Will Block Kalshi” (mass.gov).
• CFTC amicus brief filed at the SJC, April 24, 2026 (cftc.gov); coalition brief of 38 state attorneys general, same date.
• Polymarket v. Campbell, federal complaint filed February 9, 2026.
• KalshiEX LLC v. Flaherty, No. 25-1922 (3d Cir. April 6, 2026).
• Massachusetts Gaming Commission licensee notice on sports event contracts, November 2025 (massgaming.com).
• Massachusetts General Laws Chapter 23N (An Act Regulating Sports Wagering, 2022).
• Contemporaneous oral-argument coverage: Bloomberg Law, Courthouse News Service, Insurance Journal, CommonWealth Beacon, and WWLP (May 2026).

This page is general information, not legal or tax advice. Prediction-market law is changing week to week; verify the current status of any case or platform before acting. Last verified August 2, 2026.