States can be achieved with enums, I'm writing a similar game too and thanks to @Anko I implement his solution like:

public enum PaddleWay {
UP, DOWN, STOP

}

    private void handleMovement(){
    if(p1paddleway == PaddleWay.STOP) {
        paddle1yPos = paddle1yPos;
    }
    if(p1paddleway == PaddleWay.UP) {
        paddle1yPos -= PADDLESPEED;
    }
    if(p1paddleway == PaddleWay.DOWN) {
        paddle1yPos += PADDLESPEED;
    }
    if(p2paddleway == PaddleWay.STOP) {
        paddle2yPos = paddle2yPos;
    }
    if(p2paddleway == PaddleWay.UP) {
        paddle2yPos -= PADDLESPEED;
    }
    if(p2paddleway == PaddleWay.DOWN) {
        paddle2yPos += PADDLESPEED;
    }
}

    @Override
public void keyPressed(KeyEvent e) {
    switch(e.getKeyCode()) {
    //p1 inputs
    case KeyEvent.VK_A:
        p1paddleway = PaddleWay.UP;
        break;
    case KeyEvent.VK_Z:
        p1paddleway = PaddleWay.DOWN;
        break;
    //p2 inputs
    case KeyEvent.VK_O:
        p2paddleway = PaddleWay.UP;
        break;
    case KeyEvent.VK_K:
        p2paddleway = PaddleWay.DOWN;
        break;
    }
}
@Override
public void keyReleased(KeyEvent e) {
    switch(e.getKeyCode()) {
    //p1 inputs
        case KeyEvent.VK_A:
            p1paddleway = PaddleWay.STOP;
            break;
        case KeyEvent.VK_Z:
            p1paddleway = PaddleWay.STOP;
            break;
    //p2 inputs
        case KeyEvent.VK_O:
            p2paddleway = PaddleWay.STOP;
            break;
        case KeyEvent.VK_K:
            p2paddleway = PaddleWay.STOP;
            break;
    }

it's a little long but you can just copy paste once you write one method and simply manipulate.

States can be achieved with enums, I'm writing a similar game too and thanks to @Anko I implemented his solution like this:

public enum PaddleWay {
    UP, DOWN, STOP
}

private void handleMovement(){
    if(p1paddleway == PaddleWay.STOP) {
        paddle1yPos = paddle1yPos;
    }
    if(p1paddleway == PaddleWay.UP) {
        paddle1yPos -= PADDLESPEED;
    }
    if(p1paddleway == PaddleWay.DOWN) {
        paddle1yPos += PADDLESPEED;
    }
    if(p2paddleway == PaddleWay.STOP) {
        paddle2yPos = paddle2yPos;
    }
    if(p2paddleway == PaddleWay.UP) {
        paddle2yPos -= PADDLESPEED;
    }
    if(p2paddleway == PaddleWay.DOWN) {
        paddle2yPos += PADDLESPEED;
    }
}

    @Override
public void keyPressed(KeyEvent e) {
    switch(e.getKeyCode()) {
    //p1 inputs
    case KeyEvent.VK_A:
        p1paddleway = PaddleWay.UP;
        break;
    case KeyEvent.VK_Z:
        p1paddleway = PaddleWay.DOWN;
        break;
    //p2 inputs
    case KeyEvent.VK_O:
        p2paddleway = PaddleWay.UP;
        break;
    case KeyEvent.VK_K:
        p2paddleway = PaddleWay.DOWN;
        break;
    }
}
@Override
public void keyReleased(KeyEvent e) {
    switch(e.getKeyCode()) {
    //p1 inputs
        case KeyEvent.VK_A:
            p1paddleway = PaddleWay.STOP;
            break;
        case KeyEvent.VK_Z:
            p1paddleway = PaddleWay.STOP;
            break;
    //p2 inputs
        case KeyEvent.VK_O:
            p2paddleway = PaddleWay.STOP;
            break;
        case KeyEvent.VK_K:
            p2paddleway = PaddleWay.STOP;
            break;
    }

It's a little long but you can just copy paste once you write one method and simply manipulate.