Massachusetts Court Ruling Bans Prediction Market Kalshi Platform Sports Betting Business

A Massachusetts judge ruled on Tuesday that the state government has the authority to prohibit the emerging prediction market platform Kalshi from offering sports "gaming" services within the state, with the ban potentially taking effect as early as this Friday.

If the ruling is implemented, it will be the first state-level ban in the United States targeting such prediction market platforms.

The decision stems from a lawsuit filed last September by the state attorney general, accusing Kalshi of operating a sports "gaming" business without obtaining the necessary licensing, violating local regulations.

Kalshi's defense argued that as an "event contract" market regulated by the U.S. Commodity Futures Trading Commission (CFTC), federal regulations should take precedence over state-level bans.

The judge noted in the ruling that Kalshi, despite being aware of regulatory requirements in various states and having been warned by the CFTC to exercise caution, expanded its business into states requiring "gaming" licenses, thereby voluntarily assuming the risk and must comply with local laws.

Analysts believe this move could pose a significant blow to Kalshi. Since launching its sports "gaming" business in January 2025, it has become a core growth driver, contributing approximately 70% of the company's revenue. The loss in Massachusetts not only means immediate market loss but could also trigger other states to adopt similar regulatory actions.

In summary, the core conflict in this case revolves around how to delineate federal and state regulatory authority when prediction markets are incorporated into the highly regulated sports "gaming" sector, highlighting a key obstacle in financial technology innovation.

Although the judge's "state authority" ruling casts a pause on prediction markets, it may only be the beginning of a long-term struggle involving innovation, regulation, and jurisdiction.

Furthermore, subsequent legal rulings and whether the CFTC will coordinate further with state regulators on this issue will likely become focal points of industry attention.

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