Polymarket Sues Massachusetts Over Prediction Market Crackdown

Polymarket sued Massachusetts Attorney General Andrea Joy Campbell in federal court on Monday.

The move preempts the same fate that just hit rival Kalshi in January.

A state judge ordered Kalshi to cease sports wagering in Massachusetts within 30 days.

Judge Christopher Barry-Smith rejected Kalshi’s argument that federal CFTC oversight shields it from state gambling laws.

Coinbase Global Inc (NASDAQ:COIN) and Robinhood Markets, Inc (NASDAQ:HOOD) may face compliance headaches. Both platforms integrated Kalshi into their trading apps.

What’s At Stake

Polymarket claims the state is overstepping. Chief Legal Officer Neal Kumar posted that “Congress gave the CFTC, not states, exclusive authority over event contracts.”

The company purchased CFTC-licensed QCX in late 2025 to operate under federal oversight.

Massachusetts disagrees.

The state sued Kalshi in September for operating without a sports betting license. Judge Barry-Smith sided with the state.

The judge noted Massachusetts law prohibits licensed operators from serving anyone under 21. Kalshi allowed users as young as 18.

Polymarket warns similar enforcement would cause “irreparable harm.”

The potential damage includes disrupted operations, fragmented markets, collapsed liquidity and eroded user trust.

The platform seeks injunctions to block state enforcement.

Nevada already issued a temporary restraining order last week. Kalshi faces challenges in at least eight states, including New York, Illinois and Ohio.

Market Impact

Prediction market volumes are surging, with Super Bowl trading expected to hit $3.1 billion in 2026, up 39% year-over-year. Recent funding valued Polymarket at $9 billion and Kalshi at $11 billion.

The Massachusetts ruling may reshape the entire industry. If states win, platforms face patchwork licensing. If federal jurisdiction prevails, prediction markets operate freely nationwide.

Image: Shutterstock