A judge delayed implementing injunction barring sports event contracts in light of Kalshi’s emergency motion filing
Kalshi asked a Massachusetts state court to pause enforcement of a newly issued preliminary injunction on Friday as the company prepares to appeal, escalating a high-stakes legal fight over whether state gaming regulators can enforce action against a federally regulated prediction market platform.
The emergency motion follows a preliminary injunction issued earlier this week by the Suffolk County Superior Court, which sided with the Massachusetts Attorney General’s office, finding that Kalshi’s sports event contracts likely violate state gaming law and therefore the platform must stop offering them.
During a scheduled hearing later in the day, Superior Court Judge Christopher Barry-Smith was initially planning to address implementation of the injunction and next steps. But in light of Kalshi’s appeal plans and emergency motion, after hearing from both parties, the judge said he would hold a later hearing to address the injunction implementation and Kalshi’s stay request.
According to gaming lawyer Daniel Wallach, who was covering today’s hearing in real time, Barry-Smith asked for Massachusetts’ response to the emergency motion to be delivered to the court by Jan. 30. Kalshi’s reply to the state’s opposition would be due Feb. 2. Wallach said that even if the judge denies the stay request, subsequent stay motions filed with other courts could delay forced geoblocking of sports contracts until April.
The injunction delay allows Kalshi to continue offering sports event contracts in Massachusetts for the time being, including markets for the Super Bowl on Feb. 8. Sports prediction markets via Kalshi remain accessible in all 50 states, as similar legal battles with other states currently remain tied up in federal district courts.
Kalshi must stop listing sports contracts in MA if injunction implemented
In the emergency motion filed this morning, Kalshi urged the court to stay its injunction while the company pursues review in Massachusetts appellate courts. The filing makes clear that Kalshi intends to challenge the injunction through the state appellate process, beginning with the Massachusetts Appeals Court or possibly the Supreme Judicial Court.
If the injunction is implemented, Kalshi would be required to block Massachusetts users from accessing sports event contracts, most likely by geofencing the state. In its emergency motion, Kalshi argued that complying with such restrictions would require significant technical changes and suggested that the process would be costly and could take months to put in place.
Notably, other prediction platforms have already taken a state-by-state approach with their sports markets. Crypto.com, for example, has geofenced sports event contracts in multiple states, including Massachusetts. Likewise, newer prediction market platforms from DraftKings, FanDuel, and others only allow sports trades in select states.
During today’s hearing, the AG’s office said it is seeking to stop Kalshi from listing new sports markets, but is not asking the platform to cancel trades that have already been placed. As a result, existing sports contracts that have not yet been resolved would likely be allowed to run to completion.
Judge says Kalshi likely violates state law, rejects federal preemption claim
In the decision issued Tuesday, Barry-Smith granted the Commonwealth’s request for a preliminary injunction, finding that Kalshi is likely operating an unlicensed sports wagering platform in violation of Massachusetts law. Barry-Smith concluded that Kalshi’s sports event contracts fall within the state’s definition of sports wagering and that the company has so far failed to show that federal law preempts state regulation.
The judge rejected Kalshi’s argument that the Commodity Exchange Act (CEA) and the Commodity Futures Trading Commission’s federal oversight strip Massachusetts of enforcement authority. Barry-Smith wrote that Congress did not clearly intend to preempt state sports wagering laws and that the CEA’s “exclusive jurisdiction” language does not void traditional state powers over gambling.
“The Sports Wagering Law is an exercise of traditional state police power,” he wrote, adding that requiring Kalshi to obtain a state license does not conflict with federal regulation of derivatives markets.
Barry-Smith also dismissed Kalshi’s claims of irreparable harm, finding that any disruption to its business stemmed from its own decision to offer sports contracts in Massachusetts without seeking licensure. The court noted that Kalshi proceeded despite regulatory uncertainty and a CFTC advisory memo cautioning exchanges about sports event contracts and advising them to devise contingency plans. Concluding that the public interest is better served by enforcement of the state’s sports betting framework, the judge denied Kalshi’s motion to dismiss.
Massachusetts case could provide blueprint for other state actions
Massachusetts’ efforts to stop Kalshi from offering sports event contracts in the state are already shaping up to be a template for other states on how to confront the prediction market platforms. Until now, most state-level enforcement has been limited to cease-and-desist orders, many of which Kalshi has answered by filing lawsuits challenging the states’ authority. Recent legal filings suggest the Massachusetts approach is already producing ripple effects across the country.
Within days of Barry-Smith’s ruling, other jurisdictions moved to incorporate the Massachusetts developments into their own cases.
- The Nevada Attorney General’s Office and Nevada Gaming Control Board filed the Massachusetts ruling as supplemental authority in the Ninth Circuit appeal of its Kalshi case, arguing it supports state enforcement and undercuts Kalshi’s claims of irreparable harm and preemption.
- In the Southern District of New York, the New York State Gaming Commission also included the Massachusetts decision as supplemental authority in its case against Kalshi, urging the court to consider a state judge’s reasoning that Massachusetts is likely to succeed on the merits of its unlicensed wagering claim.
- Tennessee regulators also cited the Massachusetts order in their opposition to Kalshi’s motion for a preliminary injunction, arguing that the state should deny federal relief because of how Massachusetts framed preemption and enforcement.
- Today it was reported that New Jersey regulators have now also cited the Massachusetts ruling, filing it as supplemental authority in the Third Circuit as they seek to overturn a federal injunction blocking state enforcement against Kalshi.
Legal analysts expect states like Ohio, Connecticut, and others to also lean on the Massachusetts ruling as they defend their own gaming authority in ongoing or future suits.
A few days before Nevada’ supplemental authority filing, the state announced a civil lawsuit against Polymarket, in which Nevada moved for a temporary restraining order and preliminary injunction to shut down that platform’s sports contracts on similar grounds. Nevada’s action against Polymarket mirrors Massachusetts’ approach against Kalshi, marking one of the first instances of a state pursuing a prediction market platform through a lawsuit filed in state court rather than administrative action alone.
Massachusetts’ early success in state court could push more states to follow its lead, turning to litigation rather than administrative warnings to test the limits of prediction market regulation.
