Polymarket is suing the state of Massachusetts in federal court, arguing that only the CFTC has the authority to regulate event contracts, while at least eight US states have implemented measures to restrict this activity.
Polymarket filed a lawsuit against the state of Massachusetts in federal court, arguing at its core that the U.S. Commodity Futures Trading Commission (CFTC) is the only agency granted by Congress the authority to regulate event contracts, implying that states do not have the independent power to shut down forecast markets that fall under the exclusive jurisdiction of this federal agency.
Neal Kumar, Polymarket 's Chief Legal Officer, confirmed the filing of the lawsuit in a statement released Monday, February 9, asserting that the case involves national markets and raises important legal questions requiring adjudication at the federal rather than state level.
Kumar warned that seeking to shut down Polymarket US and other futures markets through state courts would not change federal law, and argued that states like Massachusetts and Nevada pursuing this path would miss a great opportunity to develop futures markets.
The lawsuit aims to prevent potential coercive actions from Andrea Campbell, the Attorney General of Massachusetts. Polymarket criticizes the efforts of several states to regulate the forecast market, arguing that such actions inappropriately interfere with a Derivative market already regulated at the federal level.
The legal battle was initiated shortly after a Massachusetts state court issued a ruling temporarily halting Kalshi's provision of sporting event contracts within the state.
Legal conflicts are spreading.
According to earlier information from Cryptopolitan, Judge Barry-Smith stated his intention to finalize the injunction compelling Kalshi to comply with the state's sports betting laws after a hearing on January 16, citing that licensing and overseeing sports betting in Massachusetts serves the state's public health, safety, and financial interests.
However, the judge is considering the possibility of temporarily suspending the order to allow the platform to file an appeal. Kalshi is a regulated exchange and prediction market where individuals trade based on the outcomes of real-world events.
A similar situation occurred in Nevada, where a judge prohibited Polymarket from offering sports betting contracts to residents of the state, citing a conflict with existing sports betting regulations. The decision came after the judge determined that issuing these contracts risked undermining and disrupting the state's sports betting regulatory system, according to sources close to the matter who requested anonymity due to the sensitive nature of the issue.
Massachusetts and Nevada aren't the only states opposing the prediction market in the U.S. Analysts found that at least eight other states, including New York, Illinois, and Ohio, have implemented measures to restrict or oppose sports-related prediction markets, based on information from the Kalshi platform itself.
Despite increasing legal challenges, analysts point to the forecast market still recording rapid growth. Data from Dune – a community-based analytics platform – shows these markets reached an All-Time-High volume of $3.7 billion in just one week in January, surpassing the previous peak.
Additional data from Messari – a leading provider of cryptocurrency market information – shows that the two leading platforms, Polymarket and Kalshi, achieve nearly equivalent volume despite operating under different models.
Polymarket is a decentralized platform that utilizes blockchain technology, while Kalshi is a traditional financial exchange. Both have raised significant Capital from venture investors, with Polymarket reaching a valuation of $9 billion and Kalshi reaching $11 billion after their most recent Capital rounds.
