Thirty-eight state attorneys general filed an amicus brief backing Massachusetts in its Kalshi lawsuit, arguing states must retain control as the CFTC battles enforcement.
Thirty-eight state attorneys general have lined up behind Massachusetts in its legal fight against prediction market platform Kalshi—an escalating dispute over who should regulate online wagering-like products.
The brief. led by Nevada Attorney General Aaron Ford and Ohio Attorney General Dave Yost. argues that the outcome in Massachusetts could reshape how states police gambling and sports betting.. For the amici States. the core worry is not simply Kalshi’s business model. but Massachusetts’s theory that federal law should block state enforcement.
“Kalshi’s aggressive theory of preemption. ” the brief warns. would threaten states’ ability to protect residents in an area that has long been governed through a mix of state oversight and federal rules for financial markets.. The attorneys general describe themselves as traditionally responsible regulators of gambling—an argument that matters in a moment when prediction markets have become increasingly mainstream. and when state-by-state enforcement is being tested in court.
The Massachusetts case began after the Bay State became the first to sue a prediction market operator when Attorney General Andrea Campbell filed suit in Suffolk County Superior Court in September.. A judge later issued a preliminary injunction that barred Kalshi from offering sports “contracts” in Massachusetts.. But the pause did not last; an appeals court granted an emergency stay. putting the ban on hold while the litigation continues.
Kalshi maintains it is not operating gambling or sports betting.. The company. based in New York. says it should be treated like a derivatives-market platform and therefore falls under the Commodity Futures Trading Commission’s jurisdiction.. State regulators. however. have argued the practical effect of Kalshi’s offerings resembles wagering—and they have been pursuing cases meant to establish that resemblance as a legal category.
That regulatory conflict is now playing out across multiple courtrooms at the same time.. The new amicus brief was released Friday. the same day the CFTC filed its own lawsuit seeking to prevent Massachusetts from enforcing its gambling laws against prediction market operators.. The legal cadence underscores a broader institutional tug-of-war: whether state gaming enforcement can coexist with federal oversight. or whether federal regulation should dominate.
The stakes are amplified by the patchwork reality of sports betting across the United States.. After the U.S.. Supreme Court lifted a longstanding ban in 2018, most states moved to legalize some form of sports wagering, but not all.. Still. the Massachusetts brief notes that even where sports betting remains prohibited. Kalshi has continued to operate—raising the question of what “regulation” means when enforcement tools differ by jurisdiction.
For everyday consumers, the fight can sound abstract—preemption, regulators, derivatives versus gambling.. But the human impact is straightforward: whether a person in a state where betting is illegal can access a product framed as an “exchange” or a “contract. ” and whether states can stop it without waiting for federal agencies to act first.. When enforcement becomes a jurisdictional contest, the result can be uneven access, uneven protections, and uneven accountability.
From a policy perspective, the dispute also exposes how new financial-technology models are colliding with older regulatory frameworks.. The amici States argue that state gambling regulation has historically operated alongside federal regulation of derivatives markets.. In other words. states are saying they are not asking to eliminate federal authority; they are asking the courts to preserve a role for state law where consumer protections. licensing rules. and enforcement priorities have traditionally been set.
The timing adds another layer.. The CFTC’s lawsuit against Massachusetts comes as the Trump administration has recently sued states—including Arizona. Connecticut. and Illinois—over prediction market enforcement.. Meanwhile. New York Attorney General Letitia James has also taken direct action. suing Coinbase and Gemini over allegations that they ran illegal gaming enterprises.. The cumulative effect is a regulatory ecosystem in which both federal agencies and state attorneys general are racing to define the legal boundaries.
In Washington. the bigger question is whether Congress—or the courts—will eventually settle on a consistent approach for prediction markets nationally.. For now. the Massachusetts case is becoming the centerpiece: if the theory of federal preemption gains traction. states could lose leverage in enforcement.. If states’ position prevails. the legal path for state regulators may be clearer. but court battles could continue state by state.
Either way, the message from 38 attorneys general is unmistakable.. They are not treating this as a single company dispute; they are casting Kalshi’s business model as a test of governance.. As prediction markets push further into mainstream betting-like behavior. the courtroom outcome may determine whether regulation follows traditional state gaming rules—or shifts toward a primarily federal framework led by the CFTC.