Federal judge sends Massachusetts v. Kalshi case back to state court for final resolution
A federal judge has sent a case involving the Commonwealth of Massachusetts and KalshiEX LLC (Kalshi) to the state level.
The news follows a long-running battle between the two in a case filed for “Violation of Sports Betting Law” by Bay State Attorney General Andrea Joy Campbell.
Kalshi had lobbied for federal courts to support his argument through the Commodity Futures Trading Commission (CFTC) statute and under the Commodity Exchange Act (CEA).
The original case stated that Kalshi offered event contracts on its platform “under the guise of ‘event contracts'” to Massachusetts residents without the required authorization from the Massachusetts Gaming Commission, in violation of GL c. 23N.”
Kalshi v. Massachusetts Case Returned to State Level
According to legal commentator Daniel Wallach, Judge Richard G Stearns of the US District Court of Massachusetts decided to let this decision be decided at the state level.
Wallach posted on social media about the decision to send the matter back to the state, which could deal a fatal blow to Kalshi’s federally approved sporting event contracts.
BREAKING: The Massachusetts federal court GRANTS the Commonwealth’s motion to send its case against Kalshi back to state court, where the Commonwealth’s previously scheduled emergency motion for a preliminary injunction (and likely loss) awaits Kalshi. The order is not subject to appeal. pic.twitter.com/vmVLsPKh0U
-Daniel Wallach (@WALLACHLEGAL) October 28, 2025
CFTC and CEA not seen as total preemption
The original document filed by Attorney General Campbell (September 12, 2025) stated that prediction marketers exposed Massachusetts residents to “a plethora of harms, including, but not limited to, public health risks associated with compulsive gambling – a clinically recognized behavioral addiction – and disastrous financial losses.” »
Kalshi had used the CFTC and CEA banners, stating that they prevented regulation of the specific subset of sports gambling games the company offers in contract markets.
Judge Stearns ruled that he considered Kalshi’s view, but the CEA does not allow the prediction provider’s CFTC status under this law to be considered to have full preemption. Instead, Judge Stearns ruled that this statute “is a mere defense of federal preemption, not a claim of complete preemption.”
The case will now be heard in the Superior Court of Massachusetts for Suffolk County and could significantly impact Kalshi’s future in the state and that of other similar betting companies.
Kalshi fought against many other states, seeking relief from their lawsuit and attracting the attention of state betting regulators.
As we reported, the prediction provider filed for a “permanent injunction and declaratory judgment” against the New York Gaming Commission, which sent a cease and desist letter to Kalshi.
Kalshi argued: “This action challenges New York State’s intrusion into the federal government’s exclusive authority to regulate derivatives trading on exchanges supervised by the Commodity Futures Trading Commission (“CFTC”).
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Federal judge sends Massachusetts v. Kalshi case back to state court for final resolution appeared first on ReadWrite.
