Polymarket Sues Massachusetts Amid Prediction Market Crackdown

As the prediction market crackdown intensifies in the US, Polymarket has launched a lawsuit against Massachusetts. The move intends to block state officials from restricting the platform’s operations, arguing that the industry falls under federal oversight.

Legal Clash Erupts Over Prediction Market Regulation

Polymarket filed a federal lawsuit against Massachusetts Attorney General Andrea Campbell and state gaming regulators earlier today. On February 10, the company claimed that the state-level action is limiting its operations, restricting users’ access to the platform.

Notably, the move comes on the heels of a recent setback for the prediction market platform Kalshi. Last Friday, Kalshi requested to pause a ban on its sports prediction markets. In November 2025, Kalshi was hit by a class action lawsuit, which alleged that the team was operating an unlicensed sports betting platform. Although Kalshi argued that prediction markets are regulated by the CFTC, the judge objected to the statement.

It is worth noting that these platforms are facing increased scrutiny in the country. Last month, Polymarket, Kalshi, and Crypto.com received a cease-and-desist letter from the Tennessee Sports Wagering Council. The move was intended to stop these platforms from offering sports betting contracts.

In the latest development, Polymarket also put forward a similar argument. According to Polymarket, prediction market regulation comes under the jurisdiction of the CFTC, not the state. Polymarket CLO Neal Kumar stated,

“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. These are national markets with critical questions that must be resolved in federal court.”

Previously, as CoinGape reported, crypto exchange Coinbase also filed a similar lawsuit against three US States, including Michigan, Illinois, and Connecticut. Coinbase challenged the US States’ prediction market oversight, which the exchange believes falls outside its control. The exchange also takes a similar approach to Polymarket and Kalshi, arguing that prediction markets should be overseen by the CFTC.

Polymarket Flags Threat to National Market Stability

Significantly, the lawsuit argues that the state-level regulation causes “imminent and irreparable harm.” The platform claims that the state is currently trying enforce its gambling laws on prediction platforms.

Polymarket also argued that penalties or restrictions could interfere with its legally approved operations, split the national market, reduce liquidity, strain banking and business partnerships, and weaken user confidence in the platform. The firm added,

“Immediate judicial intervention is necessary to uphold Congress’ mandate, protect the federal market structure, and safeguard the rights of users nationwide.”

According to Polymarket’s claims, CFTC is responsible for overseeing derivatives and futures markets, which include prediction markets as well. Further strengthening this statement, the lawsuit cited CFTC Chairman Michael Selig’s words. On January 29, 2026, Selig stated that his agency would review how it deals with cases that test its authority. This ongoing review is expected to shape the regulation of prediction markets in the US.