A court directive that would temporarily prohibit prediction market Kalshi from offering sports-event contracts in Massachusetts has been suspended. This update emerges as state authorities aim to prevent the company from operating in the state, asserting that entities providing wagers on sporting events must obtain a Massachusetts sports betting license.

Massachusetts Attorney General Andrea Campbell had previously initiated a lawsuit against New York-based Kalshi in September. Campbell contends that Kalshi runs an online “prediction market” enabling users to stake claims on sports outcomes without the necessary sports betting license in Massachusetts.

Prediction markets function similarly to financial futures markets. Participants can buy and sell event contracts associated with specific outcomes, with payouts based on the occurrence of those events.

Kalshi maintained in court that it operates outside of state jurisdiction due to its federal regulation. The company argued that federal law supersedes state law as per the supremacy clause of the U.S. Constitution.

Judge Christopher K. Barry-Smith of Suffolk Superior Court dismissed this argument last week. He indicated that Congress did not mean to stop states from regulating sports betting. Based on this finding, Barry-Smith ruled to issue a preliminary injunction that would prevent Kalshi from conducting business in Massachusetts as the case unfolds.

However, Barry-Smith postponed the enforcement of the injunction to give both sides an opportunity to negotiate and possibly reach an agreement on the order’s wording. Drafts are expected by February 4.

The ongoing litigation could extend for several months or longer.

The judge also mentioned he would review Kalshi’s urgent request for a stay of the injunction while the company moves forward with an appeal.

In reaction to the ruling, Campbell characterized the decision as a victory for state gaming oversight. “The court has underscored that any business aiming to engage in the sports gaming sector in Massachusetts must adhere to our regulations—no exceptions,” she stated.

The case highlights how state regulators are navigating sports-related contracts available through platforms that lie outside conventional sports-betting licensing frameworks.