Kalshi Takes Loss in Massachusetts State Court Over Sports Contracts
Kalshi took a setback in state court Tuesday, when a Massachusetts judge ruled the Commonwealth can apply its sports-wagering law to prohibit the exchange’s sports event contracts despite Kalshi’s federal preemption argument. The decision positions Massachusetts as the first state to secure a ruling that would bar Kalshi’s sports contracts, pending a Friday hearing on a preliminary injunction.
Judge Christopher Barry-Smith ruled in favor of the Commonwealth, rejecting Kalshi’s federal preemption argument that only the Commodity Futures Trading Commission (CFTC) can restrict the event contracts it lists. Barry-Smith argued that Massachusetts’ Sports Wagering Law falls within the state’s traditional police powers and does not amount to an attempt to regulate derivatives markets.
“The Sports Wagering Law is an exercise of traditional state police power. It imposes an additional regulatory burden on an event contract platform that seeks to offer sports related [sic] event contracts, in service of the public health. It is not a competing attempt to regulate derivatives markets, or an outright ban on event contracts in the state. That both systems may operate in harmony demonstrates a lack of frustration to Congress’s intent,” Barry-Smith wrote.
If either side requests it, the court will hold a hearing Friday at 12 p.m. ET. The preliminary injunction would take effect after that hearing. The parties could also reach an agreement on implementation before Friday.
What’s next for sports contracts in MA?
Kalshi’s loss does not mean its sports event contracts will leave the state immediately. The exchange can appeal to the Appeals Court or seek review by the Supreme Judicial Court, Massachusetts’ highest court. Any appeal would extend the legal battle for at least several more weeks.
If Kalshi notices an appeal to the Appeals Court, this could go straight to the Supreme Judicial Court. The SJC has the power to transfer appeals “upstairs,” and it sometimes does so with interesting cases presenting novel issues (like this one). https://t.co/5j3oXDuotx
— Andrew Kim (@akhoya87) January 20, 2026
To continue operating in Massachusetts while an appeal proceeds, Kalshi would likely need a stay from Barry-Smith. The judge could address that request as soon as Friday.
Meanwhile, Kalshi remains mired litigating related disputes in other jurisdictions across the country. One closely watched federal case remains pending: the Third Circuit’s decision in Kalshi’s New Jersey sports-contract dispute.
Circuit courts and Supreme Court prospects
In September 2025, the U.S. Court of Appeals for the Third Circuit heard arguments in Kalshi’s case against New Jersey over the exchange’s sports contracts. Kalshi previously won a preliminary injunction in New Jersey, and the state appealed.
The Third Circuit is widely viewed as one of Kalshi’s more favorable appellate venues. Oral arguments focused in part on whether Kalshi’s sports contracts are swaps, which New Jersey contests. If Kalshi prevails in the Third Circuit, it would increase the likelihood of a circuit split, which in turn could raise the odds that the U.S. Supreme Court takes up the broader question. On the other hand, a loss in the Third Circuit would be an alarming setback for the prediction market operator, given the court’s perceived receptivity to the company’s arguments.
The Massachusetts decision is a significant milestone in the state-court fight, but bigger tests for sports contracts are still ahead.