CFTC to sue Massachusetts over Kalshi prediction markets

On April 24 the Commodity Futures Trading Commission filed an amicus brief in the Massachusetts Supreme Judicial Court in Commonwealth of Massachusetts v. KalshiEx LLC (No. SJC-13906), arguing that Congress granted the agency exclusive authority over U.S. commodity derivatives markets, including event contracts known as prediction markets. The filing warns the agency will bring court cases against states that try to enforce state laws against exchanges regulated by the CFTC.

The brief describes the Commodity Exchange Act and the 1974 creation of the CFTC, saying Congress intended a single federal framework for futures, options and swaps traded on regulated exchanges. It states event contracts tied to sports, elections or weather fall within that statutory scope and argues state enforcement could conflict with federal law and fragment national oversight.

CFTC Chair Michael S. Selig posted on X that several states are pursuing enforcement actions the agency views as unlawful. He wrote: “Despite several court decisions blocking states from pursuing unlawful enforcement actions against CFTC-regulated exchanges, some states are still trying to encroach on the CFTC’s exclusive authority over prediction markets. Massachusetts, we’ll see you in court.” The agency’s brief repeats that message in legal language.

The filing is part of broader litigation by the agency. The CFTC has sued multiple states, including New York, and is coordinating with the Department of Justice in some disputes over state enforcement of gambling or other laws against prediction market platforms. Federal courts have already intervened in some matters; a judge issued a temporary order blocking a criminal prosecution in Arizona against operators of a prediction market platform.

KalshiEx and similar platforms offer contracts that pay out based on whether specific events occur. The CFTC contends those contracts are swaps or futures when traded on regulated exchanges and that state attempts to treat them as illegal gambling or to bring civil or criminal cases would conflict with federal oversight and create inconsistent rules across states.

The Massachusetts court must weigh the CFTC’s claim of exclusive jurisdiction against the state’s enforcement action. Market participants and legal observers are watching the case because the decision could affect whether states can apply their laws to platforms that operate online and serve customers across state lines. The CFTC has said it will continue to litigate where it views state action as encroaching on its statutory authority.