Kalshi has secured two months of breathing room after suing the Connecticut Department of Consumer Protection over its predictions operations in the state.
Last week, the DCP’s gaming division issued a cease-and-desist to immediately stop Kalshi, Robinhood and Crypto.com from offering sports predictions in the state. The regulator considers the markets to be sports betting and outlined seven areas where the companies risk harming consumers in a press release.
Kalshi sued the next day in US District Court for the District of Connecticut and contacted the DCP about a joint stipulation agreement, which included scheduling briefs for dates in January with an oral argument to follow. The two sides agreed, and the court approved the joint stipulation on Monday.
The DCP could not comment on whether it would consider a similar timeline for Crypto.com and Robinhood due to “pending litigation.”
Schedule for Kalshi vs. DCP
Kalshi submitted its motion for a preliminary injunction on Dec. 5, in which it argued how it could be harmed without it.
The DCP must file its response by Jan. 9. Kalshi’s reply in further support of its motion for a preliminary is due by Jan. 30.
The two sides will meet in court on Feb. 12 at 10 am.
DCP Commissioner Bryan Cafferelli, the DCP’s Director of Gaming Kristofer Gilman and Connecticut Atty. Gen. William Tong are also listed as defendants in the case.
Kalshi surprised by C&D
In Kalshi’s response to the cease-and-desist, its lawyer noted the expectation of immediate compliance was “sudden and unexpected.”
“While Kalshi believed it had engaged in a constructive, good faith dialogue with DCP regarding the claims in the C&D Letter—including by voluntarily meeting with representatives of DCP and the Connecticut Attorney General this past May—the C&D Letter’s sudden and unexpected demand of immediate compliance, in lieu of continued engagement, left Kalshi with no choice but to file the enclosed complaint in the United States District Court for the District of Connecticut, seeking declaratory and injunctive relief to prevent Connecticut authorities from enforcing their preempted state laws against Kalshi,” reads the email.
Seven strikes against predictions
The DCP outlined seven areas detailing how predictions markets “are illegal and put consumers money and information at risk:”
- Not required to abide by the technical standards required for gaming licensees in Connecticut.
- No integrity controls, which could lead to participants or insiders betting on or impacting the outcome of events.
- Winnings may not be paid out “as advertised” since house rules are not held to a regulatory standard.
- If an issue arises with a platform, the DCP has no legal recourse to help recover lost funds.
- Platforms offer event contracts on events where the outcome is known, such as awards shows or potential trades in sports. Connecticut prohibits betting on events with known outcomes because “they are unfair to consumer without insider knowledge.”
- Platforms advertise to those on the state’s voluntary self-exclusion list as well as on college campuses, which is illegal in the state.
- Platforms require customers to be 18 or older while Connecticut sports betting customers must be 21 or older.
