As fans basked in the afterglow of Super Bowl LX (and replayed the Bad Bunny Halftime Show), they may not have noticed that the battle between Massachusetts and prediction markets, Kalshi and Polymarket, hit a new level.

On Feb. 9, a Massachusetts judge denied Kalshi’s emergency motion to stay an injunction barring its sports contracts in the state. Hours later, Polymarket preemptively sued the Massachusetts Attorney General to stop the same thing from happening to it. Both platforms argue that the federal government — not states — has exclusive authority over their markets. But a legal expert tells DeFi Rate that argument will be settled in court, not by regulators.

“The core preemption issue that’s being fought in courts across the country is indeed a question of federal vs. state,” Andrew Kim, partner at Goodwin Law’s Appellate and Supreme Court Litigation practice, tells DeFi Rate. “Ultimately, it’s up to the courts to decide the question, not the CFTC.”

To recap: Massachusetts Attorney General Andrea Joy Campbell sued Kalshi on behalf of the Commonwealth of Massachusetts in September 2025. The suit alleged that the platform’s sports-related event contracts constitute unlicensed sports wagers, since Kalshi had neither applied for nor received a Massachusetts sports wagering license from the state’s gaming commission. The Massachusetts Gaming Commission had already warned its licensed sportsbooks against entering the prediction market space, signaling a broad crackdown. In January, the AGO secured a preliminary injunction, prohibiting Kalshi from offering sports-related contracts in the state.

Then on Feb. 9, Massachusetts Superior Court Judge Christopher Barry-Smith denied Kalshi’s emergency motion to stay the injunction. Kalshi claimed that enforcing it would cause “irreparable harm.” The ruling means Kalshi has 30 days from the Feb. 9 decision to implement geolocation technology blocking Massachusetts users from accessing sports event contracts.

On the same day, Polymarket preemptively sued the Massachusetts Attorney General’s Office and the Massachusetts Gaming Commission in Boston federal court. Polymarket’s goal: stop Massachusetts from doing to it what it’s already doing to Kalshi.

“Congress gave the CFTC [Commodity Futures Trading Commission], not states, exclusive authority over event contracts,” wrote Neal Kumar, Polymarket’s Chief Legal Officer, on Feb. 9. “These are national markets with critical questions that must be resolved in federal court. Racing to state court to try to shut down Polymarket US and other prediction markets doesn’t change federal law — and states like MA and [Nevada] that have done so will miss an amazing opportunity to help build markets for tomorrow.”

Kumar’s reference to Nevada is notable. A Carson City judge granted the Nevada Gaming Control Board a 14-day temporary restraining order against Polymarket on Jan. 29, blocking the platform from offering event contracts in the state — including during Super Bowl week. A hearing on a preliminary injunction is scheduled for Feb. 11.

Prediction exchanges’ broader argument — that the CFTC, not states, holds exclusive authority — suggests these fights may ultimately come down to a division of powers. Do states’ gaming laws override the federal regulatory framework, or vice versa? Massachusetts’ approach has already become a template for other states, with Nevada, New York, Tennessee, and New Jersey all citing its ruling in their own cases against prediction market platforms.

While Kumar hopes the CFTC might step in for a swift resolution, Kim says the matter will be handled by the courts — which means it won’t get resolved anytime soon.

“Did Congress intend for the CFTC, and only the CFTC, to oversee event contracts?” asks Kim. “Or do the states get to regulate alongside the CFTC, given the overlap between event contracts and bets/wagers?”

“Congress, of course, can step in at any time, but I doubt there will be legislative intervention anytime soon,” Kim added.

Selig has indicated an intention to weigh in on ongoing court battles, breaking a long silence on the matter from the CFTC.

“[CFTC] Chairman Michael Selig has made clear that he intends for the CFTC to be an advocate for the prediction markets, and not just a neutral bystander. But on the main issue, all the CFTC can do is help persuade.”

This legal fight — now playing out in Massachusetts, Nevada, and beyond — might jeopardize Chairman Selig‘s vision of the CFTC exercising a light touch in prediction market regulation. In a Jan. 20 op-ed in the Washington Post, Selig laid out the CFTC’s mission to “deliver the minimum effective dose of regulation — nothing more and nothing less” and to put an end to “policymaking through enforcement.”

Selig, who remains the sole CFTC commissioner when the commission normally has five members appointed by the President, has signaled a hands-off approach to the growing prediction markets space. But his actions have been anything but passive so far.

On Feb. 4, the CFTC withdrew a proposed 2024 rule titled “Event Contracts” that had defined event contracts involving political contests as gaming. The agency also withdrew a September 2025 staff advisory on sports event contracts that had cautioned platforms to account for state-level enforcement risks. “Today’s actions reflect the CFTC’s commitment to lawful innovation in our markets,” said Chairman Selig, calling the 2024 rule “the prior administration’s frolic into merit regulation with an outright prohibition on political contracts ahead of the 2024 presidential election.”

Selig added that he looks “forward to working with staff on an event contracts rulemaking.” Given the legal disputes now unfolding in Massachusetts, Nevada, and beyond, that rulemaking may arrive sooner rather than later — but whether it can resolve the federal vs. state standoff before the courts do remains an open question.

The post Kalshi Loses in Massachusetts, Polymarket Sues — Will the CFTC Intervene? appeared first on DeFi Rate.

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