⭐ Key Takeaways

Massachusetts won a preliminary injunction forcing Kalshi to halt all sports‑related event contracts in the state.

The judge relied heavily on what seemed like a “duck test,” treating Kalshi’s platform as gambling under the state law despite its federal derivatives‑market structure.

A major legal vulnerability emerges around federal preemption and the Commodity Exchange Act, giving Kalshi a potential path to victory on appeal.

In Episode #11 of LexBeyond, Lex and Bianca break down the explosive Massachusetts ruling that ejects Kalshi from the state’s market. The hosts explain how Judge Berry‑Smith granted a preliminary injunction by characterizing Kalshi’s sports contracts as unlicensed gambling, leaning heavily on user‑experience cues like yes/no buttons, gamified UI elements, and even early marketing language that referenced “football spreads.” This “duck test” approach allowed the court to treat Kalshi like a sportsbook rather than a federally regulated derivatives exchange, creating a lopsided early score in Massachusetts’ favor.

But the episode’s deeper analysis highlights a critical legal inconsistency: The judge’s ruling largely sidesteps the Supremacy Clause and the Commodity Exchange Act, which grants the CFTC exclusive jurisdiction over derivatives markets. Lex and Bianca explain that by ignoring the CFTC’s tacit acceptance of Kalshi’s self‑certified contracts, and instead elevating a generic staff advisory, the court may have overreached. This opens a major appellate vulnerability, especially around federal preemption and the question of whether a state can ban a federally regulated financial instrument simply because it “feels” like gambling. We’re back to the Commodity Futures Trading Commission Act of 1974 and the tensions that led to the creation of the CFTC in the first place.

The situation is framed by Lex and Bianca as a “28–3 moment”—a blowout on the scoreboard but far from a finished game. With the injunction in place and Kalshi temporarily shut out of Massachusetts, the real battle now shifts to state appellate courts, maybe even the Supreme Court, where preemption arguments may carry far more weight. Just as in Super Bowl LI, the comeback hinges on exploiting the opponent’s overextension. If Kalshi can successfully argue that Congress intended the CFTC to have jurisdiction over the entire field of event contracts, the appellate phase could flip the momentum entirely.

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