Polymarket Sues Massachusetts Over Prediction Market Authority

TLDR

• Polymarket filed a lawsuit against Massachusetts on February 9-10, 2026.
• The lawsuit argues CFTC has exclusive jurisdiction over prediction markets.
• State actions could fragment national markets and reduce user confidence.

Polymarket has initiated a lawsuit against Massachusetts Attorney General Andrea Campbell and the state's gaming regulators. The lawsuit, filed in the U.S. District Court for the District of Massachusetts on February 9-10, 2026, challenges the state's authority over prediction markets, asserting that the Commodity Futures Trading Commission (CFTC) has exclusive jurisdiction. This move comes as a response to increasing regulatory scrutiny in the U.S.

The legal action seeks a declaratory judgment and an injunction to block Massachusetts' enforcement actions, which Polymarket argues could impede access to its platform, fragment national markets, and undermine user confidence. This is particularly significant amid a broader crackdown affecting other platforms like Kalshi, which faced a state court ruling that enforced compliance with sports betting regulations.

Key Figures and Background Information

Leading the charge for Polymarket is Chief Legal Officer Neal Kumar. State defendants named in the suit include Attorney General Andrea Campbell and other gaming authorities. The case underscores ongoing tensions between state-level enforcement and federal oversight, reflecting similar legal challenges in other states such as Nevada.

Kalshi, a competing platform, recently dealt with a related injunction. This requires compliance with state laws on sports contracts, a decision upheld by a state court to safeguard public interests. This suggests a trend of increasing state-driven regulatory actions, potentially leading to a fragmented operational landscape for prediction markets.

Neal Kumar's Statement on the Lawsuit

Neal Kumar shared insights about the lawsuit on Twitter, emphasizing the CFTC's role. He stated, "Today, we filed a lawsuit in federal court against Massachusetts. Congress gave the CFTC, not states, exclusive authority over event contracts." He also criticized states' attempts to enforce regulations as inconsistent with federal law, advocating for the markets' future potential.

Kumar also highlighted the importance of federal adjudication for such markets, suggesting that trying to "shut down Polymarket US and other prediction markets doesn’t change federal law." He stressed the need for a unified regulatory framework to foster the growth of national prediction markets.

Broader Regulatory Developments

The lawsuit references statements by CFTC Chairman Michael Selig, who indicated plans to reevaluate the agency's jurisdictional approach to prediction markets. This announcement, made on January 29, 2026, may significantly impact ongoing regulatory discourse and the framework governing prediction market operations.

The case highlights the broader intricacies of federal versus state authority over prediction markets. It calls into question the extent of state jurisdiction in a landscape where federal laws, particularly the Commodity Exchange Act, establish the CFTC's oversight of derivative trading, including event contracts.

Potential Impacts and Future Considerations

The Massachusetts lawsuit follows similar regulatory events, including state-level actions against prediction markets in Nevada and earlier court decisions affecting Kalshi. Massachusetts' legal actions could lead to fragmented markets, should differing state rulings persist without federal alignment.

Observers note that unresolved regulatory conflicts could result in markets operating with reduced liquidity and heightened operational complexities. This situation underlines the necessity for clear federal guidelines to harmonize state and federal regulatory perspectives, ensuring consistent market operations nationwide.