Paradigm Backs Kalshi in Latest State Overreach

Today, Paradigm filed an amicus brief with the Massachusetts Supreme Judicial Court, urging it to vacate a lower court injunction barring Kalshi from offering sports-event contracts to Massachusetts residents. This filing, in Commonwealth of Massachusetts v. KalshiEX LLC, is our latest in a long-running effort to defend federally regulated prediction markets against state overreach.

The Massachusetts case follows a now-familiar pattern. The Commonwealth sued Kalshi, arguing that sports-event contracts violate the state’s sports wagering law. The Superior Court agreed and entered a preliminary injunction. Kalshi appealed to the Supreme Judicial Court, which granted direct review after an intermediate appellate court stayed the injunction pending appeal. In its brief filed last month, Kalshi made clear what the Superior Court got wrong. We agree wholeheartedly with Kalshi.

The core legal question is not a close one. The Commodity Exchange Act gives the CFTC “exclusive jurisdiction” over trading on designated contract markets like Kalshi, and expressly “supersedes” and “limits” state regulatory authority over such transactions. This wasn’t an accident, and the legislative record, which we detail in our brief, is explicit: Congress’s goal was to “preempt the field.” In fact, and as we make clear, the specific problem Congress was solving for with its 1974 legislation was states treating derivatives trading as gambling and trying to regulate or ban it. Courts have uniformly agreed ever since that the CFTC, not state regulators, governs trading on federally licensed exchanges.

The stakes are national. If Massachusetts can deploy its gaming laws to cut Kalshi off from its residents, Kalshi would face 50 separate regulatory regimes for a nationwide, federally-regulated exchange. This patchwork system of different states demanding control over national markets is precisely the “total chaos” Congress designed the CEA to prevent. We’ve been in this fight since the beginning, filing amicus briefs in cases out of New Jersey, Maryland, Nevada, and California on the same fundamental principle: the CFTC sets the rules for these markets, not any state or tribal regulator. The legal foundation for that principle keeps getting stronger.

There will be more challenges; there always are when an innovation threatens entrenched incumbents. But as long as states keep inventing theories to fragment federal oversight of prediction markets, we’ll keep showing up to make sure courts apply the law as Congress wrote it. Our full brief is available [here].