Hassan Maishera
TL;DR
-
Connecticut has sued Kalshi to stop the prediction market platform from offering sports-related event contracts in the state.
-
State officials argue that the contracts constitute unlicensed sports betting and are subject to Connecticut gambling laws.
-
Kalshi maintains that its markets are federally regulated derivatives overseen exclusively by the CFTC.
Connecticut has filed a lawsuit against Kalshi seeking to prevent the prediction market platform from offering sports-related event contracts within the state.
Attorney General William Tong announced the action on Wednesday, saying Connecticut is seeking a court injunction requiring Kalshi to stop offering products the state considers unlicensed sports wagers.
Connecticut Calls Kalshi's Contracts Sports Betting
Tong argued that Kalshi’s sports event contracts are functionally equivalent to traditional sports betting and should therefore comply with Connecticut’s gambling and consumer protection laws.
“Sports event contracts are no different than sports betting and are not magically shielded by federal law from Connecticut’s commonsense consumer protection laws,” Tong said.
Governor Ned Lamont also claimed that Kalshi’s markets pose risks to consumers and young people.
Lamont said Connecticut legalized sports wagering in 2021 to create a regulated and responsible market rather than allow operators to offer sports betting products without state oversight.
Kalshi Head of Litigation Jovy Dedaj described Connecticut’s lawsuit as the latest example of arbitrary and inconsistent enforcement.
Dedaj claimed the state continues to allow other prediction market platforms to operate while targeting Kalshi. He argued that the alleged unequal treatment demonstrates why prediction markets require federal rather than state oversight.
Kalshi has been contacted for further comment on the lawsuit.
Dispute Began with December Cease-and-Desist Order
The lawsuit is the latest development in a legal battle between Connecticut and Kalshi that has continued for several months.
In December 2025, the Connecticut Department of Consumer Protection ordered Kalshi, Robinhood and Crypto.com to stop promoting and offering sports event contracts in the state.
Kalshi responded the following day by suing Connecticut officials. The company argued that its event contracts are federally regulated derivatives products rather than gambling services.
The Commodity Futures Trading Commission granted Kalshi designated contract market status in 2020.
Kalshi argues that this designation places its markets under the CFTC’s exclusive jurisdiction and prevents states from applying their gambling laws to its event contracts.
Connecticut disputes that position, maintaining that federally regulated status does not exempt Kalshi from state laws governing sports wagering and consumer protection.
Earlier this month, US District Judge Vernon Oliver denied Kalshi’s motion for a preliminary injunction that would have prevented Connecticut from taking enforcement action while the case proceeds.
Kalshi has appealed the decision to the US Court of Appeals for the Second Circuit.
The ruling allows Connecticut to continue pursuing enforcement for now, although the wider dispute over federal and state authority remains unresolved.
CFTC Challenges State Restrictions
The CFTC entered the jurisdictional dispute in April by suing Connecticut, Arizona and Illinois.
The regulator argued that states cannot prohibit markets offered by a federally registered designated contract market.
CFTC Chair Michael Selig said the agency would defend its exclusive regulatory authority and protect market participants from what he described as excessive state enforcement.
The competing lawsuits could help determine whether prediction market sports contracts fall exclusively under federal derivatives law or can also be regulated as gambling at the state level.
Connecticut is one of more than a dozen states that have pursued lawsuits or enforcement actions against Kalshi over its sports-related markets.
Earlier this month, a Washington court ordered Kalshi to stop offering event contracts covering sports, elections, politics, entertainment, culture, technology and science in the state.
Baltimore also sued Kalshi and Polymarket this month, alleging that their sports contracts constitute illegal gambling. The lawsuit also brought companies including Coinbase, Robinhood and Webull into the wider dispute.
