Connecticut has sued Kalshi to block the prediction market operator from offering sports event contracts in the state, arguing the products are “no different than sports betting” and violate Connecticut’s licensing and consumer-protection framework.
Atty. Gen. William Tong, Gov. Ned Lamont and Department of Consumer Protection Commissioner Bryan Cafferelli announced the suit Tuesday. Kalshi lost its bid earlier this month to stop the state from enforcing CT sports betting law.
The latest complaint shifts Connecticut from a cease-and-desist posture to a direct enforcement action seeking an injunction.
Connecticut seeks injunction
Connecticut’s complaint targets Kalshi’s yes-or-no contracts on sporting outcomes, including team and player winners, season win totals, standings, scoring, point spreads and individual statistics. State officials say the company is offering gambling without the licenses and standards required of Connecticut sportsbooks.
“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 in the release. “These laws exist for a reason—to protect minors, to prevent problem gambling, to ensure your money is safe and your personal information is protected. None of that is happening now on Kalshi, and we’re suing to put a stop to it.”
Lamont tied the suit to the state’s original rationale for legalizing sports wagering in 2021: a regulated market developed with Connecticut’s tribal partners, rather than what he called a “free-for-all on sports betting.”
Cafferelli said the products are “indistinguishable from sports wagering,” alleging platforms have portrayed them as investments while sidestepping state technical standards, consumer protections and exclusion requirements.
Kalshi response to CT lawsuit
Kalshi’s Head of Litigation Jovy Dedaj took to social media to comment on the lawsuit.
“Connecticut just filed this lawsuit to shutdown Kalshi immediately, but they’re okay with other prediction markets operating there in the meantime,” Dedaj tweeted. “This is the latest in a line of arbitrary and inconsistent enforcement by the states, which shows this has nothing to do with consumer protection. If it did, the states would be seeking the same relief across the board.
“This unequal treatment is exactly why federal oversight is necessary.”
State already rejected Kalshi’s argument
The lawsuit comes after the DCP’s Gaming Division ordered Kalshi and two other platforms in December 2025 to stop advertising, offering or promoting sports event contracts to Connecticut residents and permit consumers to withdraw funds held on the platforms.
Kalshi responded by filing suit in federal court, arguing that its contracts are swaps governed exclusively by the Commodity Exchange Act and the Commodity Futures Trading Commission.
U.S. District Judge Vernon Oliver denied the company’s preliminary injunction request earlier this month, finding Kalshi had not carried its burden on any of the required factors.
Oliver’s ruling went beyond a narrow procedural denial. The court concluded that Kalshi’s sports contracts are not swaps under the CEA and, even if they were, the statute would not preempt Connecticut’s traditional authority to regulate sports wagering.
Kalshi sought an emergency injunction pending appeal, but that request was denied as well. The company is now appealing to the Second Circuit, which has also declined to provide immediate relief while the merits appeal proceeds.
CFTC has sued CT, too
Connecticut’s case is part of the larger prediction markets legal battle in which states are fighting both Kalshi and the federal regulator responsible for overseeing Kalshi’s exchange.
In April, the CFTC and the U.S. Department of Justice sued Connecticut, Arizona and Illinois, contending those states cannot apply gambling laws to contracts offered by CFTC-registered designated contract markets. The commission’s theory is that Congress granted it exclusive authority over the swaps and futures products traded on those exchanges.
Connecticut has moved to dismiss that CFTC lawsuit. The state’s position is that a federal registration cannot transform a sports wager into a product immune from laws designed to protect consumers, preserve the integrity of sports and govern gambling conducted within Connecticut.
The CFTC sees it differently. It has argued in litigation around the country that state restrictions on registered exchanges interfere with a comprehensive federal framework and improperly fragment a national derivatives market.
A nationwide conflict
Kalshi is now in legal disputes with regulators in roughly 20 states. The CFTC has sued at least nine states to defend what it calls its exclusive jurisdiction over event contracts.
Courts have reached sharply different conclusions:
- Minnesota: A federal judge temporarily blocked Minnesota’s statutory prediction market ban, finding the federal preemption claims likely to succeed at least in part.
- Nevada: State regulators secured injunctions barring Kalshi’s Nevada sports markets and are still challenging the company’s compliance with court-ordered location restrictions.
- New Jersey: The Third Circuit held that Kalshi’s sports event contracts are swaps and that federal law likely preempts New Jersey gambling enforcement.
- New York: A federal judge denied Kalshi’s preliminary injunction request, allowing New York’s gambling law enforcement effort to continue as Kalshi appeals.
- Utah: A federal court granted Utah summary judgment, concluding that its anti-gambling laws can be enforced against Kalshi’s sports event contracts.
Supreme Court looks increasingly likely
The inconsistent lower court outcomes have made a Supreme Court showdown increasingly likely, something many in the gambling industry have expected since the industry emerged.
The Third Circuit’s Kalshi-friendly New Jersey ruling is now being tested against adverse decisions in the Second Circuit, the Sixth Circuit and other jurisdictions.
That conflict may become sharper soon. Kalshi’s appeals in New York and Connecticut are pending in the Second Circuit, while a consolidated appeal involving state enforcement actions in the Sixth Circuit could produce another key ruling.
Legal observers have suggested that a circuit-level decision siding with the states would create the kind of split that often invites Supreme Court review.
For now, Connecticut’s lawsuit gives the state a direct vehicle to seek a shutdown order while Kalshi continues its federal appeal.
