A Massachusetts Superior Court judge has refused to pause an injunction that will require prediction markets operator Kalshi to stop offering sports event contracts in the state, reinforcing the authority of state regulators over sports wagering activity. The decision gives Kalshi 30 days to comply with the order, after which Massachusetts residents and visitors will no longer be able to access sports-related contracts on the platform.

Judge Christopher Barry-Smith of Suffolk County denied Kalshi’s emergency motion to stay the injunction while the company appeals. The ruling follows an earlier decision granting Massachusetts a preliminary injunction after state officials argued Kalshi was effectively running an unlicensed sportsbook. Barry-Smith concluded that the financial effects on Kalshi did not outweigh the state’s interest in enforcing its gambling laws.

Kalshi responded by reiterating its view that federal law governs its exchange. In a statement cited by Reuters, the New York-based company said it remains confident that its platform falls under the authority of the US Commodity Futures Trading Commission (CFTC) and added, “We will stay the course and fight for that belief.”

Judge Emphasizes State Authority Over Sports Betting

The injunction stems from a lawsuit filed by Massachusetts Attorney General Andrea Joy Campbell, joined by the Massachusetts Gaming Commission, which accused Kalshi of sidestepping state gaming requirements. Campbell argued that the company’s sports event contracts amount to illegal sports betting under Massachusetts law, including provisions that restrict wagering by individuals under 21.

Barry-Smith agreed with the state’s position last month and formalized the preliminary injunction on Friday. In denying Kalshi’s request for a stay, he underscored that the Commodity Exchange Act does not prevent states from regulating gambling. While some Kalshi markets may fall within federal commodities oversight, Barry-Smith wrote that this does not extend to “traditional state police powers, such as gambling regulation”.

He also rejected Kalshi’s argument that compliance would cause irreparable harm. Addressing the company’s claims of economic loss and implementation challenges, Barry-Smith stated, “Economic loss alone does not usually rise to the level of irreparable harm which a party must establish to obtain a preliminary injunction.”

As part of the order, Kalshi must deploy geolocation technology to block access to sports event contracts for users located in Massachusetts. The restriction applies only to sports-related markets and will not affect the company’s other offerings.

A Growing Clash Between States and Prediction Markets

The Massachusetts ruling fits into a broader national dispute between state gaming regulators and prediction market operators. Regulators across several states have argued that companies like Kalshi and Polymarket are offering sports wagers without proper licenses, while the operators maintain that federal commodities law preempts state intervention.

Barry-Smith addressed this tension directly in his order, noting that Kalshi knowingly structured its business around federal oversight. “Kalshi adopted its business model — relying on CFTC regulation of ‘swaps’ to offer nationwide sports betting in contravention of state gaming laws — with eyes wide open,” he wrote. “It plainly must have appreciated the risk — or likelihood — of an order like this preliminary injunction. Being a sophisticated entity, it presumably prepared for that risk.”

Other courts have issued mixed rulings. In Nevada, a judge initially allowed Kalshi to continue operating after the company challenged a cease-and-desist order. That decision was later reversed, clearing the way for regulators to treat the contracts as illegal sports betting. In Maryland, a judge declined to block enforcement actions against Kalshi, while a New Jersey court granted the company a preliminary injunction that remains under appeal.

Massachusetts stands out as the first state to initiate legal action rather than respond to a lawsuit from Kalshi. Campbell said the latest ruling “affirms Massachusetts’ right to enforce our gambling laws and hold all operators who wish to offer sports wagers in our state accountable.”

Wider Industry Impact and Federal Response

The decision has already influenced other operators. Shortly after Barry-Smith denied Kalshi’s emergency stay, Polymarket filed suit in federal court against Campbell and the Massachusetts Gaming Commission. The complaint cited the Kalshi injunction as evidence that the state is willing to shut down markets authorized at the federal level. “That injunction demonstrates the Commonwealth’s willingness to use state law to shut down federally authorized markets despite clear federal preemption,” the lawsuit states.

At the federal level, the leadership of the CFTC has signaled a potential shift. New CFTC Chair Michael Selig said the agency may reassess its role in ongoing litigation involving prediction markets. “I have directed CFTC staff to reassess the Commission’s participation in matters currently pending before the federal district and circuit courts,” Selig said. He added that the agency would also develop new rules to clarify standards for event contracts.

For now, Kalshi must comply with the Massachusetts order unless an appellate court grants relief. Barry-Smith noted that the company is free to seek a stay from a higher court, but until then, access to sports event contracts in the Bay State will end after the 30-day implementation period.