A Superior Court judge will order one of the largest prediction markets in the country to stop taking action on sports-related events in Massachusetts, approving the intervention that Attorney General Andrea Campbell sought this fall when she accused the company of illegally offering de facto sports betting.
Suffolk County Superior Court Judge Christopher Barry-Smith said Tuesday he will issue a preliminary injunction against Kalshi, an online trading platform through which users 18 or older can wager on the likelihood of an occurrence by purchasing an “event contract.” Campbell sued the company in September, arguing it was essentially running a sportsbook without a license from the Mass. Gaming Commission.
Kalshi claimed it was the “first fully regulated financial exchange in the U.S. specifically for event contracts, officially designated as a Designated Contract Market (DCM) by the Commodity Futures Trading Commission” and that its federal status preempted state law. Barry-Smith, who was first assistant attorney general under Campbell’s predecessor Maura Healey, disagreed.
“First, Kalshi knowingly proceeded in Massachusetts and other states that require sports wagering entities to be licensed, even after the CFTC warned it to be cautious in light of ongoing state enforcement efforts,” the judge wrote. He added, “There can be little question that Kalshi well understood that its business model — especially once it began offering bets on sporting events — came into direct conflict state enforcement regimes; Kalshi chose to take that risk head-on.”
Kalshi declined to comment on the judge’s order Tuesday.
Barry-Smith wrote in his order that the state and Kalshi “discussed, but did not resolve, certain details of the Commonwealth’s requested injunction, including how to prohibit new contracts without impacting already existing contracts” during a December hearing. He gave Campbell’s office until 4 p.m. Wednesday to submit a proposed preliminary injunction consistent with his decision and Kalshi will then have until 10 a.m. Friday to respond.
If Barry-Smith decides a hearing is necessary, or if either side asks for one, a hearing will be held at noon Friday. After that, the judge said he will issue the injunction.
Campbell said the injunction “marks a major step toward fortifying Massachusetts’ gambling laws and mitigating the significant public health consequences that come with unregulated gambling.”
The Gaming Commission sent a letter in November to the sportsbooks it licenses, some of which have announced plans to enter the prediction market space, reminding them that “the Commission may take steps up to and including revocation of your license” if they offer sports-related event contracts in Massachusetts or direct patrons to such contracts being offered here.
