Federal Court Sends Massachusetts Case Against Kalshi Back To State Court
The ruling is a legal setback for the prediction market. Roundup: Polymarket's US launch is just weeks away, per Bloomberg.
Kalshi lost its bid to get a Massachusetts case heard in federal court instead of state court, a legal setback for the prediction market.
In September, the Massachusetts attorney general’s office sued Kalshi because it believes the prediction market is offering sports betting without a license in the state. Kalshi tried to get the case moved to federal court, but a judge on Tuesday remanded the case back to the state court system. Kalshi likely hoped that it would have a friendlier venue in federal court, where it has notched some victories, than in state court.
From the order remanding the case:
The Commonwealth of Massachusetts (the Commonwealth) filed this civil enforcement action against defendant KalshiEX LLC (Kalshi) in state court. Kalshi removed the case to this court on September 16, 2025. Before the court now is the Commonwealth’s timely motion to remand. For the following reasons, the court will allow the motion.
The complaint asserts a single claim against Kalshi: unlicensed sports wagering in violation of Mass. Gen. Laws ch. 23N, § 5. Kalshi does not contend that the federal Commodity Exchange Act (CEA) completely preempts the state’s traditional police power to regulate sports gambling within its borders. It argues only that the CEA precludes regulation of the specific subset of sports gambling that Kalshi offers – wagering on designated contract markets. …This is a plain vanilla federal preemption defense, not a claim of complete preemption.
The distinction matters. Complete preemption arises in instances where “Congress so strongly intended an exclusive federal cause of action that what a plaintiff calls a state law claim is to be recharacterized as a federal claim.” Fayard v. Ne. Vehicle Servs., LLC, 533 F.3d 42, 45 (1st Cir. 2008) (emphasis in original). It is “a narrow exception to the well-pleaded complaint rule,” Lopez-Munoz v. Triple-S Salud, Inc., 754 F.3d 1, 5 (1st Cir. 2014), and applies only where the defendant can show clear Congressional intent to displace state regulation, see Hillsborough Cnty. v. Automated Med. Labs., Inc., 471 U.S. 707, 717-720 (1985); see also Rhode Island v. Shell Oil Prods. Co., 35 F.4th 44, 57 (1st Cir. 2022) (defendant must show Congress clearly intended to supersede state authority) (emphasis in original). The court discerns no such clear intent in the CEA or its legislative history.
Some quick analysis of what this means from attorney Andrew Kim of Goodwin Law:
“Judge Stearns’ order sends the Mass AG’s case against Kalshi back to state court. That order is not appealable to the federal court of appeals; the case will stay in state court.
When the case gets back to state court, the state-court judge will have to decide Massachusetts’ pending motion for a preliminary injunction. This is a first in these prediction markets cases: the Commonwealth is asking the state court to block Kalshi from operating in the Commonwealth. State courts are generally not as friendly to federal preemption arguments as federal court, which is why Massachusetts wanted the case in state court to begin with.
Whatever the state-court judge decides on the motion for a preliminary injunction (which will probably happen in short order -- a matter of weeks, not months), the case will most likely end up in the Massachusetts Appeals Court (and possibly the Massachusetts Supreme Judicial Court). If Massachusetts is able to obtain an injunction (and keep it), other states may take a page from the Commonwealth’s playbook.”
Sports prediction markets face a new wave of fraud, from insider trading to syndicates and spoofed locations. Radar Protect helps platforms detect and stop risky activity in real time, using location and device signals across 300+ brands in finance, retail, QSR, and gaming. Flag multi-accounting, account sharing, identity theft, and more, without slowing down your user experience. Radar can help you fight fraud with less friction.
Prediction markets news roundup
Polymarket Plans US Return Within Weeks With Sports Focus (Bloomberg, paywall): “Prediction market Polymarket is preparing to return to the US in the coming weeks with a focus on sports betting, according to people familiar with the matter. Initial trading is likely by the end of November but won’t be broadly available to everyone, said some of the people who asked not to be identified discussing the confidential plans. The timing of the launch could allow the company to capture more volume during peak US football and basketball season.”
ICYMI this morning:
PayNearMe has developed the gaming industry’s first platform that is purpose-built to dramatically improve the end-to-end payment experience. It enables operators to manage the entire payment journey, for all major forms of payment and through the most popular channels. With PayNearMe, operators gain full control of the payment flow, promoting acquisition, retention and efficiency. One platform, one integration—built to solve gaming’s toughest payments problems.
Compass Point Still Bullish on Robinhood, Citing Prediction Market Growth (Decrypt): “Analysts at investment bank Compass Point believe that Robinhood’s stock will continue to climb, pointing to prediction market growth and revenue from crypto trading fees and staking rewards. Professional sports are emerging as a notable tailwind for Robinhood. When the retail brokerage reports third-quarter earnings next month, Robinhood will likely say that revenue generated from prediction markets grew at a faster rate than revenue derived from processing customers’ transactions, the analysts wrote in a Monday note. In the three months ended Sept. 30, prediction market revenue likely increased 100% quarter-over-quarter to around $20 million, Compass analysts wrote. Meanwhile, Compass analysts expect transaction revenue to increase 35% over the same period.”
Website for MetaMask claims portal surfaces, spiking PolyMarket odds of MASK token launch (The Block): “The odds of MetaMask launching a token this year spiked to 35% on Polymarket after a link supposedly pointing to a token claim site surfaced on Monday. Officials for MetaMask have long teased a potential token to power the largest Ethereum-focused wallet, incubated by the blockchain development company Consensys.”
Prediction Protocol Myriad Debuts on BNB Chain to Reach New Users Across Asia (Chainwire): “Prediction protocol Myriad is expanding to BNB Chain, introducing new Automated Markets and localized experiences tailored for Asian users, including a forthcoming Mandarin-language version. The launch marks a major step in Myriad’s multichain roadmap, following integrations with Abstract earlier this year and Linea in July. Myriad’s deployment on BNB Chain opens the door to millions of potential users while reinforcing the project’s goal of delivering fast, intuitive, and globally accessible prediction markets.”
“Over the past year, we’ve been steadily building toward a truly multichain future for Myriad,” said Ilan Hazan, co-founder and COO of Myriad. “Our launch on BNB Chain isn’t just another technical integration. It’s a natural evolution of what we’ve always stood for: meeting users where they are.”
The expansion accompanies the rollout of Automated Markets, a new feature designed for speed and simplicity. These markets use auto-resolution and short timeframes to enable continuous flow, making it easier for users to participate in fast-paced prediction environments without long settlement cycles. Beyond the technical rollout, Myriad’s BNB Chain launch is part of a broader push into Asia.
“The BNB Chain ecosystem continues to play a major role in making crypto more accessible worldwide,” said Farokh Sarmad, president and co-founder of Myriad. “We see this integration as a meaningful step in that shared mission.”
Loxley Fernandes, CEO and co-founder of Myriad, added, “If a new infrastructure layer is needed to bring the Myriad experience to more people, we build it. The BNB Chain ecosystem has one of the most active and diverse communities in crypto, and we’re excited to become part of it.”