Decentralized prediction market platform Polymarket has filed a lawsuit against the Commonwealth of Massachusetts, challenging the state’s aggressive regulatory stance on event contract markets and pre-empting a potential ban that could affect its own operations. The suit, filed earlier this week, targets state regulators, including the office of Secretary William Galvin, arguing that Massachusetts is overstepping its constitutional authority by classifying federally regulated prediction markets as illegal gambling.
The immediate impetus for the lawsuit stems from Massachusetts regulators’ increasing scrutiny of Kalshi, a CFTC-regulated exchange for event contracts. State authorities have signaled their intent to ban Kalshi’s sports-related markets, arguing they fall under the state’s prohibition against sports betting, despite Kalshi operating under the jurisdiction of the Commodity Futures Trading Commission (CFTC).
Polymarket’s legal strategy asserts that Massachusetts’ vague and expansive interpretation of gambling laws creates an untenable regulatory climate for innovative financial platforms. The platform maintains that its markets are informational tools that reflect collective wisdom and are distinct from traditional sports wagering or securities offerings. Polymarket is seeking declaratory and injunctive relief to affirm its right to operate within the state without facing arbitrary enforcement actions.
Legal observers note that this case marks a critical juncture for the entire prediction market industry. If Massachusetts successfully bans federally-sanctioned event contracts based solely on their subject matter (e.g., sports, politics), it could set a damaging national precedent that curtails the growth of these markets across the United States, forcing essential regulatory clarity through judicial intervention rather than legislative action.
Source: Polymarket Sues Massachusetts Ahead of Looming Ban of Kalshi Sports Markets
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