Polymarket Challenges Massachusetts in Federal Court
Crypto prediction market Polymarket escalated its fight for regulatory clarity on Monday, February 9, 2026, by filing a lawsuit against Massachusetts Attorney General Andrea Joy Campbell. The suit, lodged in Boston's federal court, seeks to preempt the state from shutting down its operations. Polymarket argues that its contracts are financial instruments under the exclusive jurisdiction of the federal Commodity Futures Trading Commission (CFTC), not gambling products subject to state-by-state licensing.
This legal challenge comes just weeks after a Massachusetts state judge delivered a blow to competitor Kalshi, temporarily blocking it from offering sports-related contracts in the state. The judge in that case ruled that Kalshi's offerings constituted sports wagering and were therefore subject to state gaming laws, a precedent Polymarket is now directly confronting at the federal level.
A $14 Billion Market at a Regulatory Crossroads
The lawsuit highlights the growing tension between new-era prediction markets and the established U.S. sports betting industry, which generated nearly $14 billion in gross revenue in 2024. Platforms like Polymarket, which allow users to bet on a wide range of events from politics to entertainment, are increasingly seen as direct competitors by sports betting giants such as DraftKings and FanDuel. These incumbents argue that prediction markets operate without obtaining the same state-level gambling licenses they are required to hold.
Polymarket's defense asserts that federal law, specifically the Commodity Exchange Act, grants the CFTC sole authority over these types of event contracts. The company's legal team is arguing that state-level intervention, like that seen in Massachusetts, oversteps jurisdictional bounds set by Congress.
Racing to state court to try to shut down Polymarket US and other prediction markets doesn't change federal law...
— Neal Kumar, Chief Legal Officer, Polymarket.
Federal Oversight Scrutinized as CFTC Weighs Rules
The legal battle unfolds as the CFTC itself is actively modernizing its regulations for prediction markets. CFTC Chair Michael S. Selig confirmed in January that the commission is preparing a new rulemaking initiative for these platforms. A decisive federal framework from the CFTC could bolster Polymarket's legal argument and create a unified standard for the industry across the country, though the final shape of such rules remains uncertain. The outcome of this dual-front regulatory and legal push will determine whether prediction markets can operate under a single federal umbrella or must navigate a complex patchwork of state gambling laws.
