Polymarket sues Massachusetts in high-stakes fight over prediction market rules
Polymarket has launched a federal lawsuit against Massachusetts officials, asking a court to block the state from treating its political, sports and event contracts as local gambling products. Filed on Feb. 10, the complaint names Attorney General Andrea Campbell and state gaming regulators and warns that Massachusetts’ threatened enforcement is “immediate and concrete” — a move the company says would fracture its national business and force it to choose between complying with federal oversight or obeying conflicting state restrictions.
At the core of the dispute is who gets to regulate prediction markets. Polymarket argues its event contracts fall under the Commodity Futures Trading Commission’s authority. The CFTC, which oversees derivatives and futures, has jurisdiction over certain prediction-style products, the company says — an assertion it bolsters by citing CFTC Chair Michael Selig’s Jan. 29 comments that the agency would re-examine how it handles cases testing its reach. The agency has also filed an amicus brief in a related Crypto.com case, signaling federal interest in the issue.
The suit arrives amid a string of adverse state and lower-court rulings for prediction platforms. In Massachusetts, a state judge last week refused to pause a ban on Kalshi’s sports contracts, ruling the platform must comply with state gaming laws and saying Congress did not intend to displace traditional state gambling powers. Kalshi appealed but was denied a stay and must block Massachusetts users from sports markets within 30 days. A federal judge in Nevada likewise recently denied Coinbase protection from similar enforcement, raising fresh pressure on platforms that enable trading on real-world events. Meanwhile, Robinhood — which partners with Kalshi — is seeking its own injunction in Massachusetts to avoid state licensing requirements.
Polymarket’s chief legal officer Neal Kumar framed the lawsuit as a user-rights battle, saying the company is fighting “for the users” and accusing state officials of racing to shut down innovation while disregarding federal law. State officials have declined to comment.
The outcome has wide implications for the broader crypto and fintech ecosystem. Prediction markets have attracted institutional interest and capital — Jump Trading has recently invested in both Polymarket and Kalshi — and Polymarket’s latest funding rounds value it at roughly $9 billion. Proponents argue these platforms improve price discovery and public forecasting by letting users trade on economic, sports and election outcomes. Critics counter that many contracts look like unlicensed gambling and could expose users to harm.
If Polymarket prevails, it could limit states’ ability to regulate prediction markets and strengthen the CFTC’s nationwide role. A loss, by contrast, may encourage more states to require licenses or impose bans, reshaping how (and where) crypto-enabled prediction markets operate.
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