Massachusetts Judge Takes Step Towards Kalshi Sports Event Contract Ban, But Company Will Appeal Decision

• Superior Court Judge Christopher K. Barry-Smith today denied Kalshi’s motion for an emergency stay
• The denial means an injunction is now in place to prohibit Kalshi from offering sports event contracts in Massachusetts
• However, the judge noted in his decision that Kalshi has 30-days to geofence the state, during which time it may appeal the decision

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A ban of Kalshi’s sports event contracts took another step closer today, as Massachusetts Superior Court Judge Christopher K. Barry-Smith denied the company’s motion for an emergency stay.

An injunction on the company’s sports event contracts in Massachusetts is now technically in place. Judge Barry-Smith gave Kalshi a 30-days to implement geofencing technology in the commonwealth to prohibit the contracts from residents throughout the course of the state’s lawsuit against the prediction market company.

The 30-day time period may allow for Kalshi to appeal his decision and seek another stay from an appeals judge.

Request Denied

Judge Barry Smith denied Kalshi’s appeal for an emergency stay just two weeks after he approved an injunction request from the commonwealth. The prediction market company now has a 30-day window to implement geofencing technology around the state to prohibit residents from engaging with its sports event contracts. The order only affects Kalshi’s sports event contracts and will not impact its non-sports prediction market contracts.

A Kalshi spokesperson acknowledged the judge’s decision and confirmed the company will indeed appeal the order.

“We respect the Commonwealth and its courts, but we continue to believe federal law governs our federally licensed exchange. We will stay the course and fight for that belief,” the spokesperson told Sports Betting Dime.

Kalshi’s appeal may lead a decision before the 30-day time period for geofencing concludes. Judge Barry Smith acknowledged this in his order.

“Because of the 30-day period for implementation in the Preliminary Injunction, Kalshi’s alternative request for a short stay to provide time to request a stay from the Appeals Court is unnecessary. Kalshi is, of course, welcome to seek a stay from the Appeals Court, which presumably can be decided within the implementation period.”

Fundamental Disagreement

In his approval of the preliminary injunction, Judge Barry-Smith wrote that he fundamentally disagreed with Kalshi’s assertion that the commonwealth’s attempted regulation of its sports event contracts was preempted by federal law.

Kalshi argues, Barry-Smith reported, that the Commodity Futures Trading Commission’s (CFTC) exclusive jurisdiction over transactions involving swaps must mean that Congress intends to preempt state sports gaming laws that would otherwise require licensure of designated contract markets.

“But its view of the relevant field of preemption is overly broad, particularly in light of the presumption against preemption. Although I agree that the exclusive jurisdiction provision evidences an intent to preempt some state law, I disagree that it extends as far as state gaming laws. While it would make sense for Congress to displace a state’s targeted attempt to regulate a derivative market, for example, or to clarify the roles of separate federal agencies, as address in Merrill Lynch, that logic does not suggest Congress intended to displace traditional state police powers, uch as gambling regulation,” he wrote.

Requiring Kalshi to become licensed to offer its sports event contracts in the state would not displace federal derivatives regulations or enforcement efforts, nor deter Congress’s purpose in consolidating regulatory power in the CFTC, Barry-Smith noted.

Massachusetts First to File Lawsuit

Massachusetts became the first state to levy a lawsuit against Kalshi – and the prediction markets – over its sports event contracts.

The lawsuit alleges Kalshi’s sports event contracts bypass key consumer protections that are required of licensed sports betting operators. Kalshi has not undergone the necessary comprehensive processes required by the MGC to ensure its operations are in alignment with state regulations. Kalshi also allows users between the ages of 18 and 21 to trade contracts on its platforms, when the legal age for sports betting in the state is 21.

According to the state’s lawsuit, Kalshi’s platform employs behavioral design mechanisms drawn from gambling psychology, with features that encourage “impulsive engagement, exploit award anticipation, and diminish users’ perception of financial risk.”

The lawsuit contends approximately 75% of Kalshi’s trading volume has been sports event contracts from May 17, 2025, onwards. From January to June of 2025, the state alleges Kalshi users “wagered more than $1 billion on 3.4 million sports wagers.”

“Despite Kalshi calling its product ‘event contracts,’ consumers are placing wagers on the outcome of sporting events. Kalshi’s sporting event contracts constitute ‘sports wagering’ because Kalshi is engaged in ‘the business of accepting wagers on sporting events.’ Kalshi’s offering meets the definition of a ‘wager’ under Chapter 23N because a user risks a sum of money (i.e. the price of the contract) on an uncertain occurrence in a sporting event (i.e. the position taken on the event contract) for the chance to win money if the event takes place (i.e. a prize),” Massachusetts counsel wrote in the lawsuit.