Kalshi got a reprieve in Massachusetts late Tuesday, when the commonwealth’s appeals court ruled in favor of its motion for a stay to continue operating in the state.
Massachusetts Attorney General Andrea Joy Campbell in September 2025 became the first to sue the company in state court to keep it from operating. Since then, Kalshi’s platform has remained live as the case has bounced between state and federal court. It appears it will ultimately be decided in state court, after a federal judge last year ruled that the state had jurisdiction.
Kalshi is the plaintiff in about at least half a dozen cases in federal court, and has been sued by three tribes in California and one in Wisconsin in federal court.
According to the latest docket entry received from the appeals court, “defendant’s motion for a stay pending appeal is allowed pending further order of this court or a single justice thereof.”
The stay means the injunction will temporarily be on pause while the appeals court hears Kalshi’s argument that it should be dissolved entirely.
The notice goes on to say that the decision to allow Kalshi to continue to operate does not imply “any view on the merits or the disposition of this litigation.”
Suffolk County Superior Court Judge Christopher Barry-Smith on Jan. 20 initially sided with the state and ruled that Kalshi must stop operating in the state within days. After initially delaying the timeline, he then allowed the injunction to take effect on Feb. 6, but with a 30-day waiting period that would ensure there was enough time for Kalshi to make a case for a stay before the appeals court.
At the heart of the case is Campbell’s contention that the sports event contract Kalshi is offering are de facto sports bets, which should be illegal as the company is not licensed by the state. Massachusetts has some of the most, if not the most stringent wagering regulations in the U.S., including comprehensive consumer protections that bar advertising at venues where a majority of attendees are under the legal gambling age. As a federally regulated financial entity, Kalshi is not beholden to such rules, nor does it pay state taxes. It argues that state gambling laws do not apply as they are, in its view, “preempted” by the federal Commodity Exchange Act.
Gaming commission backs AG
When the lawsuit was filed, Campbell pointed to concerns about addiction, which the Massachusetts Gaming Commission (MGC) discusses regularly. The agency most recently voted to require operators to inform bettors when they are being limited and provide an explanation about why, and in July fined DraftKings $450,000 for allowing credit cards funds in Massachusetts wallets. DraftKings — and later FanDuel — ultimately banned credit card funding from its platform.
In September, the MGC sent a letter to licensed operators warning them against offering prediction markets in the state, though it did not send a cease-and-desist to Kalshi.
In a press release when the lawsuit was filed, MGC Chair Jordan Maynard said, “Prediction market companies are expanding into sports wagering while neglecting age restrictions, player protection programs, state taxes, and other consumer protections. My fellow commissioners and I appreciate the attorney general’s efforts to enforce the law and hold these companies accountable to Massachusetts’ rigorous standards.”
Kalshi is not the only prediction market in court with the state — Robinhood and Polymarket have both sued in federal court. Polymarket filed its lawsuit last week, claiming that federal law supercedes state law and it should be allowed to continue to operate.
Depending on how the Kalshi case plays out, Robinhoold and Coinbase, both live in Massachusetts, could find themselves with compliance issues, as they offer Kalshi markets on their platforms.
