It’s hard to argue that the Super Bowl has no financial consequences. It’s a huge event, with millions, perhaps billions, in economic activity tied to what’s happening on the field, including who wins and loses.
But what about who scores the touchdowns during the Big Game? What about how many receiving yards a certain player gets? And what if it’s not the Super Bowl at all, and we’re talking about the rushing yards of a quarterback during a regular-season Thursday nighter?
At this point, you’re probably pondering a question of your own: Who cares? Well, some very influential people just might, particularly in the ongoing litigation between state gambling regulators and federally regulated prediction markets.
- A legal battle in Massachusetts centers on whether Kalshi’s sports event contracts are federally regulated financial instruments or unauthorized sports betting.
- Kalshi argues these contracts have real economic value tied to sports performance, while the state claims player prop-style bets lack credible financial consequences.
- The case highlights a broader national conflict between prediction markets and state regulators that could reshape control over sports betting.
The question of the economic value of sports event contracts, and player props in particular, came up Monday during a hearing before the Massachusetts Supreme Judicial Court.
That hearing has to do with the ongoing legal battle between Kalshi and the commonwealth, which wants to keep in place an injunction that could block the prediction market operator from facilitating the trading of sports-related event contracts in Massachusetts.
Kalshi wants to avoid this. The lawyer speaking on its behalf Monday, Grant Mainland, again raised the argument that only a federal agency, the Commodity Futures Trading Commission (CFTC), has the right to regulate its business.
What's the most clutch HR you've ever watched your team hit?
— Kalshi Sports (@KalshiSports) May 1, 2026
Aaron Judge is the early favorite on Kalshi to be the MLB Home Run King, with a 42% chance on Kalshi.
Kyle Schwarber and Munetaka Murakami remain close behind. pic.twitter.com/yp8H4Rwz63
Massachusetts, meanwhile, sees what Kalshi is doing as offering unauthorized sports betting within its borders. Those jurisdictional arguments are being made in several other states at the moment, as prediction markets and state authorities battle it out over sports event contracts.
The Massachusetts Supreme Judicial Court will try to settle that issue in the commonwealth. Yet, Monday’s hearing ranged beyond just who gets to regulate who, including de facto player prop betting via prediction markets.
One of the lines of questioning Monday had to do with the economic consequences of event contracts, namely those that have to do with sports.
Mainland said the contracts qualify as “swaps,” which federal law defines as instruments tied to “a potential financial, economic, or commercial consequence.”
Feeling exposed
And Mainland noted at one point that “various business entities out in the world, and even individuals, have exposure through their own business dealings to sports.”
The CFTC has raised a similar argument in support of sports event contracts.
Mainland, though, also pointed to the example of Kalshi's work with Game Point Capital, “an insurance company that helps college athletics departments, sports teams and sponsors to manage the financial risks of performance incentives in athletes’ and coaches’ contracts,” the New York Times reported in February.
“That company ensures performance bonuses that need to pay out when a team wins, or maybe when it loses,” Mainland said. “That's real economic exposure there.”
When asked how to regard “prop bets,” Mainland said they are “generally sort of proxies for overall player performance.”
“What people call prop bets tend to relate to, like, how is someone performing?” Mainland said. “So, is LeBron James performing better or worse? How is that going to affect the economics of his contract?”
At this point, Mainland was asked about a prop bet for the “chain gang” coming out to measure for a possible first down in the Super Bowl. He responded that rules “can get very granular” but that the definition of swap provided to the CFTC by Congress was “very broad.”
And it’s with the CFTC and federal lawmakers that the responsibility for prediction markets lies, Mainland argued. When it comes to the exchanges, it is “fundamentally a federal regulatory issue,” he said.
For its part, the CFTC has not stopped prediction markets from offering sports event contracts, which continue to serve as a de facto version of sports wagering in almost every state.
Enjoying Covers content? Add us as a preferred source on your Google account
Not so fast, my friend
But Massachusetts isn’t buying what Kalshi is selling. Speaking for the state Monday, Assistant Attorney General Gerard Cedrone said the state believes none of Kalshi’s “sports bets” are swaps.
Cedrone added Kalshi’s “categorical argument” really “breaks down” on the matter of parlays, or “combos,” to use the prediction market’s term.
Those combos, he suggested, could include a team winning a game but also someone hitting a home run in the first inning and whether a team will win by a certain amount.
“The idea that those are, first of all, that they're events, and second of all, that anyone could see ... any financial consequence associated with that is just not credible,” Cedrone said.
The debate over prop-style betting was only one part of Monday’s hour-long hearing and doesn’t capture the full scope of the case, but it highlights how the growing number of legal battles dominating prediction market news are pushing into increasingly uncharted territory as these platforms expand and disrupt existing frameworks.
While the key issue may be whether states can tell prediction markets to knock it off or not, a number of other threads are spinning off from that matter.
The CFTC has officially gone to bat for the sports event contracts of prediction market operators.
— Geoff Zochodne (@GeoffZochodne) February 18, 2026
The below is part of the CFTC amicus brief filed today in U.S. Court of Appeals for the Ninth Circuit (Crypto v. Nevada). pic.twitter.com/AhD0aqdx5C
The Massachusetts case sees Kalshi fighting off the back foot in its efforts to preempt state gambling rules with federal law. The company was sued by Massachusetts’s attorney general, instead of being the entity that sued first. The commonwealth then won a preliminary injunction against Kalshi, which is currently on hold.
States have been arguing they are the historical gambling regulators in the U.S. and are therefore within their right to tell Kalshi and others to shut down trading of sports-related event contracts. And, if Massachusetts prevails in its court fight, it could become the second state to curb Kalshi’s operations, after Nevada did so earlier this year.
Cedrone said the real “sea change” here would be if Kalshi were to win and reverse the injunction.
“It would be blocking out state regulation of something that is, in all respects, a sports bet,” he said.
