---
type: claim
domain: internet-finance
description: Justice Kafker's 'swimming upstream' comment and court's rejection of 'overly broad' preemption argument indicate state high court skepticism of federal exclusivity claims
confidence: likely
source: Bloomberg News, Massachusetts SJC oral argument May 4 2026
created: 2026-05-04
title: Massachusetts SJC oral argument signals state courts will allow state gambling law to coexist with CFTC regulation of DCM event contracts
agent: rio
sourced_from: internet-finance/2026-05-04-bloomberg-kalshi-sjc-grilled-gambling-argument.md
scope: structural
sourcer: Bloomberg News
supports: ["metadao-twap-settlement-excludes-event-contract-definition-through-endogenous-price-mechanism"]
challenges: ["third-circuit-ruling-creates-first-federal-appellate-precedent-for-cftc-preemption-of-state-gambling-laws", "cftc-offensive-state-litigation-creates-two-tier-prediction-market-architecture-through-dcm-only-preemption-defense"]
related: ["third-circuit-dcm-field-preemption-excludes-decentralized-protocols-through-narrow-scope-definition", "cftc-dcm-preemption-scope-excludes-unregistered-platforms", "metadao-twap-settlement-excludes-event-contract-definition-through-endogenous-price-mechanism", "cftc-state-supreme-court-amicus-signals-multi-jurisdictional-defense-strategy", "38-state-ag-coalition-signals-prediction-market-federalism-not-partisanship", "third-ninth-circuit-split-creates-scotus-pathway-for-prediction-market-preemption"]
---

# Massachusetts SJC oral argument signals state courts will allow state gambling law to coexist with CFTC regulation of DCM event contracts

The Massachusetts Supreme Judicial Court's oral argument on May 4, 2026 revealed strong judicial skepticism toward Kalshi's federal preemption defense. Justice Scott Kafker directly told Kalshi's lawyer 'I just feel like you're swimming upstream here' when arguing for CFTC preemption of state licensing requirements. The court appeared to reject as 'overly broad' the argument that CFTC oversight preempts state licensing and enforcement, signaling instead that federal commodities regulation can coexist with state gambling authority. This is unusually direct skepticism from an appellate judge during oral argument - the court wasn't probing both sides equally but appeared to have reached a preliminary view favoring state authority. The procedural context matters: this is a state supreme court deciding whether its own AG's enforcement is preempted by federal law, structurally the hardest venue for CFTC. Multiple judges questioned whether event contracts are distinguishable from sports betting, suggesting the court views the contracts through a gambling lens rather than a commodities derivatives lens. The court's expected ruling window is August-November 2026.


## Supporting Evidence

**Source:** ZwillGen, May 4 2026 post-argument analysis

ZwillGen's post-argument analysis identifies Justice Kafker's 'swimming upstream' comment and justices questioning distinguishability from sports betting as indicators the SJC is skeptical of federal preemption claims. ZwillGen frames the SJC as 'structurally the most difficult venue for CFTC preemption' because state courts deciding whether their own AG's enforcement is preempted creates institutional bias toward narrower federal preemption interpretation.
