Massachusetts court orders Kalshi to halt sports betting…first such case in the US

According to Decrypt, a cryptocurrency-focused media outlet, on the 20th (local time) a court in the US state of Massachusetts issued a temporary order barring prediction-market operator Kalshi from running a sports-betting prediction market. This is the first time such an order has been issued in the US against a prediction-market platform.

According to the outlet, the court found that the sports-related contracts offered by Kalshi are in substance akin to gambling. In its decision, the court said, “Until March of last year, Kalshi described itself in advertising as ‘the first nationwide legal sports betting platform,’” adding, “It later changed the wording to ‘a regulated exchange dedicated to trading directly tied to the outcome of specific events,’ but its operating model is similar to other forms of digital gambling.”

Temporary restraining orders are generally issued when the plaintiff is deemed likely to prevail on the merits. Following the decision, Massachusetts regulators are expected to take steps as early as this Friday (local time) to formally prohibit Kalshi from offering sports-betting contracts.

In the meantime, a number of US state governments have moved to regulate prediction-market platforms such as Kalshi and Polymarket by treating them as sports-betting services. The platforms have pushed back, arguing that they are not state-regulated sports betting but instead offer event-based contracts overseen by the Commodity Futures Trading Commission (CFTC).

Meanwhile, a federal court in Tennessee recently ruled that the state should temporarily withdraw a cease-and-desist order issued against Kalshi, suggesting that regulatory friction between federal and state authorities over prediction markets is likely to persist for some time.