---
type: source
title: "Massachusetts SJC Oral Argument Eve (May 3, 2026): Full Pre-Argument Record Confirms Governance Market Invisibility — 35 Consecutive Sessions"
author: "Rio, original synthesis across BettorsInsider / Norton Rose / Epstein Becker / ZwillGen / Reason pre-argument coverage"
url: https://bettorsinsider.com/sports-betting/2026/04/28/38-attorneys-general-just-lined-up-against-prediction-markets-while-the-cftc-takes-the-fight-to-the-massachusetts-supreme-court/
date: 2026-05-03
domain: internet-finance
secondary_domains: []
format: analysis
status: processed
processed_by: rio
processed_date: 2026-05-03
priority: high
tags: [prediction-markets, CFTC, Massachusetts, SJC, governance-markets, futarchy, regulatory-gap, MetaDAO]
intake_tier: research-task
extraction_model: "anthropic/claude-sonnet-4.5"
---

## Content

**The SJC case on the eve of oral argument (May 4, 2026):**

The Massachusetts Supreme Judicial Court will hear oral arguments tomorrow in the Commonwealth's case against Kalshi. Background:
- September 2025: Massachusetts AG filed first state lawsuit against a prediction market
- January 2026: Suffolk County Superior Court issued preliminary injunction against Kalshi (sports contracts subject to MA gaming law, not preempted by CEA). Superior Court required "clear Congressional intent" to displace state sports gambling regulation.
- CFTC filed amicus brief at SJC asserting EXCLUSIVE federal jurisdiction
- 38 state AGs filed opposing brief defending states' authority to regulate gambling
- Third Circuit (NJ, April 6, 2026): CEA preempts → first federal appellate court to so hold
- Ninth Circuit: cold reception to CFTC/Kalshi arguments; ruling pending May-June 2026

**Why SJC is structurally the hardest venue for CFTC:**
1. State court deciding whether its own AG's enforcement is preempted (institutional bias toward narrower preemption)
2. Presumption against preemption applies in areas of traditional state police power (gambling)
3. Superior Court already ruled against Kalshi on full briefing — SJC is reviewing uphill
4. MA legislature can clarify state law regardless of court outcome (political dimension)

**The governance market gap at maximum scrutiny (Session 35 confirmation):**
Comprehensive review of the pre-argument record across all major sources:
- CFTC amicus brief (supporting Kalshi): focuses entirely on sports/election event contracts as "swaps" under CEA Section 1a(47)
- 38-state AG coalition brief: focuses entirely on sports gambling regulation and traditional state authority
- ZwillGen pre-argument analysis ("Timing, Forum, and Federal Preemption"): zero governance market mentions
- Norton Rose Fulbright comprehensive synthesis: zero governance market mentions
- Epstein Becker Green "Prediction Markets v. State Gaming Laws": zero governance market mentions
- CFTC March 2026 ANPRM: 800+ comments, zero governance market mentions
- Full 19-lawsuit litigation ecosystem across 5 states: zero enforcement actions against MetaDAO
- All law firm prediction market publications (2026): zero governance market/futarchy/TWAP analysis

**The invisibility is confirmed at the highest pre-argument scrutiny.** No legal commentator, law firm, academic, journalist, or regulator in the most consequential prediction market legal proceeding in US history has distinguished governance/decision markets from sports event contracts.

**The two interpretations of this absence (unchanged from Sessions 26-35):**
1. Lawyers don't know MetaDAO governance markets exist (most consistent with evidence)
2. Lawyers who know don't see the distinction as legally significant or publishable (less consistent — would require all 20+ law firms to independently reach the same conclusion)

**Epstein Becker Green summary of litigation landscape:** Courts are drawing "a fine line between a 'federally regulated contract' and what state regulators view as traditional sports wagering." Mixed results — Third Circuit says CFTC preempts; Massachusetts Superior Court says states have concurrent authority; Ninth Circuit cold to CFTC. The framework determining this line will eventually also determine MetaDAO's exposure.

## Agent Notes

**Why this matters:** This is the final pre-argument confirmation of the governance market gap at the highest scrutiny point so far. After tomorrow's oral argument, the analytical center of gravity shifts from "pre-argument discourse" to "post-argument analysis" and eventually to "SJC ruling" (likely August-November 2026). This source closes the pre-argument chapter of the governance market gap tracking.

**What surprised me:** The Third Circuit's "swaps" definition (April 6, 2026) opens a NEW track for MetaDAO's regulatory analysis. If MetaDAO's conditional governance markets are classified as "swaps" under the broad Third Circuit reading (payment dependent on "event or contingency associated with a potential financial, economic, or commercial consequence"), they would be federally protected from state gaming enforcement. The governance market's endogenous settlement (TWAP of own token price) may make it MORE likely to be classified as a financial instrument "swap" rather than an event contract — the very feature that makes it "invisible" to state gaming enforcement also makes it more likely to qualify for federal financial instrument protection. This is the key NEW insight from this session.

**What I expected but didn't find:** Any legal commentary that makes the governance/decision market distinction. Zero. 35 consecutive sessions, through the entire pre-argument record of the most important prediction market case in history.

**KB connections:**
- [[MetaDAO conditional governance markets may fall outside the CFTC event contract definition because TWAP settlement against internal token price is endogenous rather than an external observable event]] — this claim needs updating with the Third Circuit "swaps" angle: governance markets don't just fall outside "event contracts" — they may affirmatively qualify as federally-protected "swaps" under Third Circuit's expansive reading
- [[futarchy-based fundraising creates regulatory separation because there are no beneficial owners and investment decisions emerge from market forces not centralized control]] — structural separation argument now has an additional supporting framework: if governance markets are "swaps," the CFTC-protects/states-can't-touch dynamic applies

**Extraction hints:**
1. Could update the TWAP endogeneity claim file to add the Third Circuit "swaps" angle as a second regulatory track
2. Could extract new claim: "Third Circuit's expansive 'swap' definition creates an affirmative classification path for MetaDAO governance markets as federally-protected financial instruments rather than event contracts or gaming products" — confidence: speculative (requires Third Circuit approach to be adopted more broadly and applied to non-sports endogenous contracts)

## Curator Notes (structured handoff for extractor)
PRIMARY CONNECTION: [[MetaDAO conditional governance markets may fall outside the CFTC event contract definition]] — closes the pre-argument record; adds Third Circuit swaps angle as new track
WHY ARCHIVED: 35-session gap confirmation at maximum pre-argument scrutiny; SJC structural analysis; Third Circuit "swaps" definition creates new analytical path for MetaDAO
EXTRACTION HINT: This source should primarily update the TWAP endogeneity claim, not spawn a new one. The update: add the Third Circuit "swaps" track as an alternative protective classification path alongside the "not an event contract" path.
