The Massachusetts Supreme Court questioned Kalshi’s argument that its sports-related prediction markets don’t fall under state gambling laws, expressing scepticism over the company’s claim that its event-based contracts operate as financial “swap” agreements rather than sports betting.
During proceedings at the Supreme Judicial Court on 4 May (Monday), justices signalled that they may uphold regulators’ authority to block their sports-event contracts in the state. Meanwhile, Kalshi argued that its operations fall exclusively under federal oversight by the US Commodity Futures Trading Commission (CFTC).
The company is seeking to overturn an injunction that would prevent it from offering contracts tied to sporting events such as football and baseball without a state gaming licence. “This is fundamentally a federal regulatory issue,” said Kalshi’s lawyer, Grant Mainland, as reported by Reuters, as he urged the court to side with the firm.
However, several of the seven justices questioned how Kalshi’s products differ from traditional sports betting, which is typically regulated at the state level. Justice Gabrielle Wolohojian pressed Mainland on the distinction, asking how the contracts differ from what would commonly be considered a bet.
Nationwide legal battle intensifies
The case forms part of a broader national legal battle over the rapidly growing prediction markets industry, which allows users to trade on the outcomes of real-world events, including elections and sports fixtures.
State regulators argue that companies such as Kalshi are effectively offering unlicensed gambling products, potentially breaching laws that restrict wagering, including age limits for participants.
Kalshi went to court in Massachusetts today https://t.co/4CTb8nyLbW
— Bill Speros (@billsperos) May 4, 2026
Massachusetts Attorney General Andrea Joy Campbell filed suit against Kalshi in September. In February, a trial court granted a preliminary injunction blocking the company from offering sports-event contracts in the state. That injunction remains on hold pending the outcome of the appeal. If enforced, Massachusetts would become the second state, after Nevada, to impose a court-ordered ban on Kalshi’s sports-related offerings.
Federal versus state regulatory powers
Kalshi maintains that its contracts qualify as “swaps”, a category of financial derivatives regulated under federal law. The company argues that the Dodd-Frank Act of 2010 granted the CFTC exclusive authority over such instruments.
Mainland pointed to a recent ruling by the 3rd US Circuit Court of Appeals, which sided with Kalshi in April by preventing New Jersey regulators from taking enforcement action. The CFTC has also backed Kalshi’s position in Massachusetts through an amicus brief. On the other hand, a coalition of 38 state attorneys general filed an amicus brief backing Massachusetts in its legal battle against Kalshi.
Despite this, Justice Scott Kafker raised doubts that Congress intended to strip states of their longstanding role in regulating gambling when it passed Dodd-Frank in the wake of the 2008 financial crisis. He noted that gambling regulation has historically fallen within state jurisdiction and suggested that any attempt to override that authority would have required clearer legislative intent.
Despite the legal battles, Kalshi has reached new heights of fame, being named among the prestigious TIME100 Most Influential Companies of 2026 and earning a place on “The 10 Most Influential Finance Companies of 2026.” The platform, which was once considered a niche experiment, is now valued at $22 billion, with over 5 million users and growing influence across finance and media.
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