Crypto: Polymarket’s Lawsuit Could Decide Who Regulates Us Prediction Markets

Polymarket’s lawsuit challenges state authority and could redefine whether the CFTC controls US prediction markets or whether states set their own rules.

Polymarket’s federal lawsuit against Massachusetts could determine whether prediction markets are regulated solely by the CFTC or also by states.

The dispute centers on whether event contracts qualify as financial derivatives under the Commodity Exchange Act or as gambling under state laws.

The lawsuit followed state-level actions against platforms like Kalshi, with Massachusetts and Nevada moving to restrict sports-related prediction contracts.

A ruling in favor of Polymarket could establish uniform national oversight and prevent a patchwork of differing state regulations.

Prediction markets are platforms where people trade contracts based on the outcomes of future events. Recently, they have been in the news due to a major legal battle in the US over regulatory authority. Central to the dispute is Polymarket’s federal lawsuit against Massachusetts. The outcome of this case could determine whether these markets are regulated exclusively at the federal level or whether states can also enforce their own rules.

This article explores Polymarket’s federal lawsuit against Massachusetts. It examines the broader legal clash over whether prediction markets fall under the exclusive authority of the US Commodity Futures Trading Commission (CFTC) or under state gambling laws. It also analyzes how the case could reshape regulatory control, market access and the future of US event-based trading platforms.

In February 2026, Polymarket filed suit in the US District Court for the District of Massachusetts to preempt enforcement by state regulators that would require it to comply with Massachusetts gambling laws. The company contends that Congress has granted exclusive authority over “event contracts,” the core products of prediction markets, to the CFTC. According to Polymarket, this renders state efforts to stop or limit its operations unlawful.

Polymarket chief legal officer Neal Kumar argues that the dispute involves national markets and that the relevant legal questions should therefore be resolved in federal court. The company opposes piecemeal enforcement by individual states. He said that restricting markets could hinder industry development.

The lawsuit’s timing was deliberate. It came shortly after Massachusetts courts acted against rival platform Kalshi, blocking sports-related contracts under state ga

Source: CoinTelegraph