Massachusetts Supreme Court Ruling on Kalshi Now Imminent — First State High Court Decision on Prediction Markets
The Massachusetts Supreme Judicial Court heard oral arguments on May 5 in the Kalshi prediction markets case and is expected to issue a decision within weeks. The SJC appeared skeptical of Kalshi's argument that CFTC regulation preempts state gambling law, and the court's ruling will be the first state supreme court decision on prediction markets anywhere in the country. Massachusetts AG Andrea Campbell secured a preliminary injunction blocking Kalshi's sports contracts in January 2026. The CFTC filed an amicus brief supporting Kalshi; a coalition of 38 state attorneys general filed an opposing brief supporting Massachusetts.
The Massachusetts Supreme Judicial Court is expected to issue a decision in Commonwealth v. KalshiEx LLC (SJC-13906) within weeks of the August 31 date, based on the four-month SJC decision timeline that runs from May 5 oral arguments. When the ruling arrives, it will be the first state supreme court decision anywhere in the country on whether prediction market operators can be regulated under state gambling law — a question that has so far been decided only by state superior courts, US district courts, and one federal circuit court (the Ninth Circuit's August 28 ruling). Massachusetts first sued Kalshi in September 2025, becoming the first state in the country to take a prediction market operator to court. Suffolk County Superior Court Judge Christopher Barry-Smith granted a preliminary injunction on January 20, 2026, barring Kalshi from offering sports event contracts to Massachusetts residents without a state gambling license. Kalshi appealed directly to the SJC, which granted direct appellate review — skipping the intermediate Appeals Court — a step Massachusetts reserves for cases of substantial public importance.
The May 5 oral argument produced a striking alignment: the Massachusetts SJC bench grilled Kalshi's counsel on whether the platform's sports outcome contracts are gambling by any practical definition, regardless of the CFTC's regulatory designation. Reporting from Courthouse News, the Insurance Journal, and Commonwealth Beacon described a court that appeared skeptical of Kalshi's core argument that CFTC registration as a designated contract market transforms a sports outcome bet into a federally regulated financial instrument. The SJC's questioning focused on two pressure points: whether the CEA's swap definition can plausibly cover a binary contract paying out on which team wins a football game; and whether allowing CFTC registration to preempt state gambling law would effectively mean Congress gave prediction market platforms the ability to bypass state gambling regulation simply by registering with a federal commodities agency. Both questions reflect the same skepticism that the Ninth Circuit expressed in its August 28 ruling — and that every district court that denied Kalshi a preliminary injunction in 2026 has articulated.
The amicus landscape at the SJC illustrates how thoroughly the prediction market question has become a states-versus-federal-government conflict. The CFTC filed an amicus brief on April 24 asserting exclusive federal jurisdiction over Kalshi's event contracts. In direct opposition, 38 state attorneys general filed their own brief on April 28 arguing that state gambling regulation applies regardless of CFTC registration — one of the largest state AG amicus coalitions against a single platform in recent memory. The 38-state coalition, combined with the 27-state coalition supporting the California tribes in the Ninth Circuit, suggests that a majority of US states have taken a formal legal position against the CFTC's preemption argument at some point during 2026. The political math of 38 state AGs publicly aligned against a federal agency position is significant independent of the legal outcome: it signals that prediction market regulation will remain a politically live issue in most states regardless of how the federal courts ultimately resolve the question.
The SJC ruling will have two distinct effects depending on its content. If the SJC upholds the state's authority to regulate Kalshi's sports contracts, the decision becomes the first state supreme court precedent on the question — persuasive authority for the Massachusetts Superior Court's ongoing enforcement, and a data point that Supreme Court certiorari petitioners (including New Jersey, which files September 3) can cite as evidence of a national legal conflict requiring SCOTUS resolution. If the SJC sides with Kalshi on federal preemption, it creates an unusual situation: a state supreme court ruling against a state AG's enforcement theory, while federal district courts in the same and neighboring states have reached the same result. Either outcome advances the legal clarity that platforms, regulators, and the Supreme Court will need. The SJC's decision timeline, aligned with New Jersey's SCOTUS cert petition and the opening of the NFL regular season on September 4, means the next four to six weeks will likely see more prediction market legal decisions than any comparable period in the sector's history.
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Recent updates
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