Key Insights:
- Polymarket says state rules would break national markets and force them to shut down operations.
- Federal oversight by the CFTC is central to Polymarket’s argument for legal protection nationwide.
- Kalshi, Robinhood, and now Polymarket face mounting legal pressure from state gaming regulators.
Polymarket has filed a lawsuit in federal court to stop Massachusetts from taking legal action against its sports prediction contracts. The case, filed on February 9 in the U.S. District Court for the District of Massachusetts, names Attorney General Andrea Campbell and the state gaming commission as defendants.
The complaint says that federal oversight by the Commodity Futures Trading Commission (CFTC) gives Polymarket the legal right to operate across state lines. The company argues that any attempt by Massachusetts to block its operations would cause business harm and interfere with national markets.
According to the filing,
The company says the threat of state enforcement is real and points to recent action taken against another prediction platform, Kalshi.
Legal Background and Recent Court Rulings
The lawsuit follows a Massachusetts state court ruling last week against Kalshi. That ruling found that Kalshi’s sports event contracts fall under state gambling law and require a license. A judge denied Kalshi’s request to pause enforcement while the company appeals.
The court ruled that Kalshi’s interpretation of federal law gave too much power to the CFTC and did not remove the state’s authority over gambling activities. “Congress didn’t intend the law to displace traditional state police powers,” the judge wrote.
Polymarket says that without a court order, it may be forced to either limit its service or violate state demands. The company believes that complying with multiple state rules would break the structure of a unified national market.
Federal Oversight and CFTC Developments
Polymarket referenced recent comments by CFTC Chairman Michael S. Selig, who called for the agency to review how it handles cases involving jurisdiction questions. The CFTC also filed a legal brief last week in a separate case involving Crypto.com and state enforcement.
Polymarket argues that the CFTC’s role covers its operations, and any separate state restrictions are outside legal bounds. The company says enforcement by Massachusetts would divide the market and set a national precedent affecting other platforms.
Industry Reaction and Related Cases
Robinhood, which works with Kalshi and other event prediction markets, has also taken legal steps in Massachusetts. The company filed for a preliminary injunction in federal court to stop the state from enforcing gambling rules on its services.
Neal Kumar, Chief Legal Officer at Polymarket, posted a statement saying regulators “racing to state court to try to shut down Polymarket US and other prediction markets doesn’t change federal law.
Source: https://coincu.com/news/polymarket-sues-to-stop-massachusetts/
