Share 
State of Play’s TL;DR
- Connecticut has filed a lawsuit against Kalshi to stop the company from offering sports-event contracts in the state.
- Officials say the contracts represent illegal sports betting.
Connecticut has sued Kalshi to block its sports-event contracts, arguing the products are unlicensed sports betting under state law.
Connecticut officials announced the lawsuit on Aug. 26, with Attorney General William Tong, Department of Consumer Protection Commissioner Bryan T. Cafferelli, and Gov. Ned Lamont backing the action.
The state is seeking an injunction to stop Kalshi from offering the contracts immediately.
Connecticut says Kalshi’s sports contracts violate state law
Kalshi’s sports-event contracts are effectively sports betting and cannot be offered without authorization under Connecticut law, according to the state.
The lawsuit follows cease-and-desist orders issued in December by the Connecticut Department of Consumer Protection Gaming Division against Kalshi and two other prediction market platforms.
Those orders directed the companies to stop advertising, promoting, or offering sports-event contracts and other alleged unlicensed online gambling in the state, while allowing users to withdraw funds held in their accounts.
Tong said:
“Sports event contracts are no different than sports betting and are not magically shielded by federal law from Connecticut’s commonsense consumer protection laws.”
Lamont also tied the lawsuit to the state’s broader approach to regulated wagering.
“When we legalised sports wagering in 2021, the goal was to create a safe, responsibly regulated market for Connecticut consumers, not to open a free-for-all on sports betting.”
Kalshi’s federal argument has not stopped state enforcement
Kalshi has argued in federal court that its contracts are derivatives regulated exclusively by the Commodity Futures Trading Commission, placing them outside state gambling jurisdiction. But earlier this month, US District Judge Vernon Oliver denied Kalshi’s motion for a preliminary injunction, allowing Connecticut to continue enforcing its gambling laws while the case moves forward.
Kalshi has appealed that ruling to the Second Circuit Court of Appeals.
The Connecticut case is part of a broader state-by-state fight over sports-related prediction markets. The dispute matters because several states, including New York, Washington, Nevada, Michigan, and Massachusetts, have argued that sports-event contracts fall under state gambling laws regardless of Kalshi’s federal regulatory status.
Based on reporting by Neha Soni for Sigma.
