Polymarket has filed a federal lawsuit against the state of Massachusetts, escalating a growing legal dispute over who has the power to regulate prediction markets in the United States. The company argues that once a prediction market is approved at the federal level, individual states lack the authority to impose separate restrictions.
Federal Oversight and CFTC Authority
At the center of the lawsuit is the claim that Congress granted exclusive regulatory authority over event-based derivatives to the Commodity Futures Trading Commission. Polymarket contends that state enforcement actions would directly conflict with federal law governing derivatives markets that operate across state lines.
The legal filing seeks to block potential action by the Massachusetts attorney general, which Polymarket says would unlawfully interfere with nationally regulated markets. The company maintains that disputes involving prediction markets should be resolved in federal court, not through state-level intervention.
State Pushback Against Prediction Markets
Massachusetts recently secured a court order preventing another platform, Kalshi, from offering sports-related event contracts in the state. Similar restrictions have also been imposed in Nevada, where a judge cited concerns over preserving the state’s sports betting regulatory framework.
The lawsuit comes amid rapid growth in prediction market activity. Trading volumes surged to approximately $3.7 billion in a single week in January. Polymarket and Kalshi now report comparable trading volumes and multibillion-dollar valuations, underscoring the rising stakes as regulatory boundaries are tested nationwide.
Disclaimer
This content is for informational purposes only and does not constitute financial, investment, or legal advice. Cryptocurrency trading involves risk and may result in financial loss.