Polymarket has filed a federal lawsuit against Massachusetts officials, escalating a growing legal battle over who has the authority to regulate prediction markets in the United States.
The crypto-based platform said state regulators are threatening enforcement actions that could disrupt its nationwide operations, following a recent court ruling against rival platform Kalshi. Polymarket argues that its markets fall under federal oversight, not state gambling laws.
Today, we filed a lawsuit in federal court against Massachusetts. Congress gave the CFTC, not states, exclusive authority over event contracts.
These are national markets with critical questions that must be resolved in federal court 🧵
— Neal Kumar (@HereComesKumar) February 9, 2026
The lawsuit, filed on February 10, names Massachusetts Attorney General Andrea Campbell and state gaming regulators as defendants. Polymarket claims the risk of enforcement is “immediate and concrete,” forcing the company to choose between complying with federal rules or fragmented state restrictions.
Clash between federal oversight and state gambling laws
At the heart of the case is a jurisdictional dispute over whether prediction markets should be treated as federally regulated financial products or state-regulated gambling services.
Polymarket maintains that its event contracts are overseen by the Commodity Futures Trading Commission (CFTC), which regulates derivatives and futures markets. The company says this federal authority should preempt state gambling laws.
In its complaint, Polymarket cited recent remarks from CFTC Chairman Michael Selig, who said the agency is reassessing how it handles jurisdictional challenges. The comments were followed by the CFTC filing an amicus brief in a separate case involving Crypto.com, signalling renewed federal interest in prediction markets.
Massachusetts courts, however, have taken a different stance. Last week, a state judge refused to halt a ban on Kalshi’s sports-related contracts, ruling that Congress did not intend federal law to override state control of gambling. Kalshi was ordered to block Massachusetts users from accessing its sports markets within 30 days.
Rising scrutiny as prediction markets gain traction
In a statement posted on social media, Polymarket’s chief legal officer, Neal Kumar, said the company is fighting to protect users and innovation. He accused state officials of moving to shut down emerging market models while disregarding federal law.
Prediction markets have gained mainstream attention in recent months, attracting institutional backing. Trading firm Jump Trading has invested in both Polymarket and Kalshi, and Polymarket is reportedly valued at around $9 billion following recent funding rounds.
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