A federal judge has sent a case involving the Commonwealth of Massachusetts and KalshiEX LLC (Kalshi) back down to the state level.
The news comes on the back of a lengthy battle between the two under a case filed “Violation of sports wagering statute,” by the Bay State’s Attorney General, Andrea Joy Campbell.
Kalshi had been pushing for the federal courts to back their argument through the company’s Commodity Futures Trading Commission (CFTC) status and under the Commodity Exchange Act (CEA).
The original case stated that Kalshi had been offering event contracts across its platform “under the guise of ‘event contracts’” to Massachusetts residents without the required licensure from the Massachusetts Gaming Commission in violation of G.L. c. 23N.”
Kalshi vs Massachusetts case sent back to state level
Judge Richard G Stearns of the US District Court for the District of Massachusetts has now decided, according to court commentator Daniel Wallach, to let this be decided at the state level.
Wallach posted the case decision to remand the case to the state on social media, which could be a crippling blow to Kalshi’s federally approved sports events contracts.
BREAKING: Massachusetts federal court GRANTS the Commonwealth’s motion to remand its lawsuit against Kalshi back to state court, where the Commonwealth’s previously-scheduled emergency motion for preliminary injunction (and a likely loss) awaits Kalshi. Order is not appealable. pic.twitter.com/vmVLsPKh0U
— Daniel Wallach (@WALLACHLEGAL) October 28, 2025
CFTC and CEA not seen as complete preemption
Attorney General Campbell’s original filing (September 12, 2025) document stated that the predictions marketeer exposed the residents of Massachusetts to a “plethora of harms, including but not limited to, the public health risks associated with compulsive gambling—a clinically recognized behavioral addiction—and disastrous financial losses.”
Kalshi had been using the banners of the CFTC and the CEA, stating that they preclude the regulation of the specific subset of sports gambling the company offers through contract markets.
Judge Stearns has ruled that he has considered Kalshi’s perspective, but the CEA does not permit the predictions provider’s CFTC status under this act to be considered as having complete pre-emption. Instead, Judge Stearns decided that this status “This is a plain vanilla federal preemption defense, not a claim of complete preemption.”
The case will now be heard in the Massachusetts Superior Court for Suffolk County and could have a huge bearing on Kalshi’s future in the state and that of similar betting companies.
Kalshi has been battling a host of other states, seeking relief from their court action and the attention of the nation’s betting regulators.
As we reported, the predictions provider has appealed for a “permanent injunction and declaratory relief,” against the New York Gambling Commission, which issued a cease-and-desist letter to Kalshi.
Kalshi has argued, “This action challenges the State of New York’s intrusion into the federal government’s exclusive authority to regulate derivatives trading on exchanges overseen by the Commodity Futures Trading Commission (‘CFTC’).”
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