TLDR
- Connecticut has sued Kalshi to stop the platform from offering sports-related event contracts in the state.
- Attorney General William Tong argues Kalshi’s sports contracts function like sports betting and must follow state gambling laws.
- Kalshi says its markets are federally regulated derivatives under the Commodity Futures Trading Commission (CFTC).
- A federal judge recently denied Kalshi’s request to block Connecticut enforcement, and the company has appealed the ruling.
- The CFTC has separately sued Connecticut, Arizona, and Illinois, defending federal authority over registered prediction markets.
Connecticut has sued Kalshi in an effort to stop the prediction market platform from offering sports-related event contracts in the state. Attorney General William Tong said the contracts function like sports betting and must follow Connecticut gambling laws.
The lawsuit seeks a court order to block Kalshi from offering what officials call unlicensed sports wagers under Connecticut state law. Governor Ned Lamont said Connecticut created a regulated sports betting market in 2021 to protect consumers and young people.
Connecticut Targets Kalshi Sports Markets
Tong said federal oversight does not shield sports event contracts from state consumer protection rules. Officials argue that Kalshi operates products that resemble sports bets, even though the company classifies them as regulated derivatives.
Kalshi rejected that view. Jovy Dedaj, the company’s head of litigation, called Connecticut’s action inconsistent and said the state allows other prediction markets to operate. He said the dispute shows why federal oversight matters.
Long-Running Fight Over State Authority
The case extends a dispute that began in December 2025. Connecticut’s Department of Consumer Protection ordered Kalshi, Robinhood, and Crypto.com to stop promoting and offering sports event contracts in the state.
Kalshi responded with a lawsuit against state officials. The company argued that the Commodity Futures Trading Commission regulates its markets because Kalshi holds designated contract market status. It said state gambling laws should not apply.
Earlier this month, Judge Vernon Oliver denied Kalshi’s request for a preliminary injunction against Connecticut enforcement. Kalshi later appealed that ruling to the Second Circuit.
CFTC Joins the Legal Dispute
The CFTC entered the legal fight in April. It sued Connecticut, Arizona, and Illinois and argued that states cannot block CFTC-registered designated contract markets under federal law.
CFTC Chair Michael Selig said the agency would defend its regulatory authority and protect market participants from state actions. The federal case adds a layer to the dispute over sports-related prediction contracts.
Kalshi Faces Pressure Across Several States
Connecticut is one of more than a dozen states that have challenged Kalshi over sports event contracts. State officials continue to argue that these markets fall under gambling laws.
A Washington court ordered Kalshi to stop offering prediction markets tied to sports, elections, politics, entertainment, culture, technology, and science. Baltimore also sued Kalshi and Polymarket this month, alleging that their sports-event contracts amount to illegal gambling.
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