Polymarket sues Massachusetts in growing state-federal fight over prediction markets

Polymarket has initiated a federal lawsuit against Massachusetts, escalating a conflict between prediction market operators and state regulators regarding oversight of event-based contracts. Polymarket's chief legal officer, Neal Kumar, argued that Congress granted exclusive authority over these contracts to the U.S. Commodity Futures Trading Commission (CFTC), meaning state efforts to shut down platforms offering prediction markets do not override federal law. This action follows a Massachusetts judge's ruling that rival platform Kalshi cannot offer sports-event contracts without a state gaming license, treating them as unlicensed sports wagering. Several states, including Nevada, are challenging prediction market platforms, while other jurisdictions have seen mixed outcomes, such as Tennessee temporarily blocking enforcement of a cease-and-desist order. Prediction market operators contend their contracts are federally regulated derivatives under the CFTC, preempting state gambling laws, a core issue these legal fights are expected to resolve. This dispute occurs amid a shift in federal policy, evidenced by the CFTC withdrawing a Biden-era proposal that sought to ban certain political event contracts.

(Source：The Block)