The Suffolk County Superior Court in Boston on Tuesday halted the ability of Kalshi to facilitate sports wagering for Massachusetts residents.
• Coinbase Global stock is showing downward pressure. What’s next for COIN stock?
Judge Christopher Barry-Smith approved a request for a preliminary injunction brought by Andrea Joy Campbell, the state’s attorney general, according to Reuters.
The decision effectively bans the platform from hosting sports betting until it secures a proper license from regional authorities.
State vs. Federal Oversight
The legal battle centers on whether Kalshi’s event contracts qualify as financial derivatives or traditional gambling.
- Kalshi's Defense: The New York firm argues that as a market registered with the Commodity Futures Trading Commission (CFTC), it falls under federal jurisdiction. They contend that federal rules for exchange-traded “swaps” preempt local gaming statutes.
- The Judicial View: Judge Barry-Smith rejected this “overly broad” interpretation. He noted that state-level gambling oversight can exist in “harmony” with federal financial regulations.
- Precedent: This ruling mirrors a previous loss for the company in Nevada, where a federal judge similarly determined that Kalshi must follow that state’s gaming requirements.
Public Safety and Age Restrictions
A significant portion of the Attorney General’s lawsuit focuses on the protection of younger consumers. Under current Massachusetts law, licensed gaming providers are strictly prohibited from serving anyone under 21.
“There is no real question that licensure… serves both public health and safety,” Barry-Smith noted in his written decision.
The state argued that Kalshi's platform allowed individuals as young as 18 years old to engage in what they described as “addictive betting products” without the safeguards required of official sportsbooks.
While Kalshi has seen a massive surge in trading volume since introducing sports contracts in January 2025, this injunction represents a significant hurdle. The company has expressed intentions to appeal, maintaining that its products are innovative financial tools rather than standard bookmaking.
A follow-up hearing is scheduled for Friday to finalize the injunction and determine if the order will be paused during the appeals process.
Partnerships
The ruling in Massachusetts likely creates a compliance headache for both Coinbase Global Inc. (NASDAQ:COIN) and Robinhood Markets, Inc. (NASDAQ:HOOD) as both companies have Kalshi integrations that allow users to trade on real-world outcomes directly within their apps.
They likely will use geofencing technology to ensure that Massachusetts residents cannot access sports-related event contracts within the apps, even if the rest of their trading features remain active.
Photo: Shutterstock
