TL;DR
- Connecticut sued Kalshi seeking an injunction to stop sports-event contracts, arguing they amount to unlicensed sports wagering under gambling and consumer protection laws.
- Kalshi says its CFTC-designated market status places the products under federal derivatives oversight, while a judge denied its preliminary injunction request and Kalshi appealed.
- More than a dozen states have challenged Kalshi, while Washington and Baltimore also took action, intensifying the national jurisdictional fight over prediction markets.
Connecticut has sued Kalshi to stop the prediction-market platform from offering sports-related event contracts, escalating a months-long legal fight. Attorney General William Tong said the state is seeking a court injunction requiring Kalshi to halt what Connecticut calls unlicensed sports wagering, while Governor Ned Lamont warned that such markets pose risks to consumers and young people. Tong argued that sports event contracts are no different from sports betting and are not shielded from state consumer protection laws. The dispute turns on whether these contracts are regulated derivatives or sports betting subject to Connecticut gambling laws.
Federal and state regulators clash over prediction-market authority
Kalshi rejects Connecticut’s position and argues that federal oversight should control. Jovy Dedaj, the company’s head of litigation, called the action arbitrary and inconsistent, pointing to other prediction markets that continue operating there. Kalshi’s defense rests on its status as a CFTC-registered designated contract market and its claim that state gambling restrictions therefore do not apply. The company says its markets are derivatives tied to future events, placing them under the Commodity Futures Trading Commission rather than Connecticut’s gambling framework. Kalshi received designated contract market status from the CFTC in 2020, central to its argument.
The confrontation intensified in December 2025, when Connecticut’s Department of Consumer Protection ordered Kalshi, Robinhood and Crypto.com to stop promoting and offering sports event contracts. Kalshi sued state officials the next day, but earlier this month Judge Vernon Oliver denied its request for a preliminary injunction. The company has appealed to the Second Circuit. The procedural setbacks have not resolved the deeper jurisdictional question, leaving state and federal authority in direct conflict over who can police these markets. Separately, the CFTC sued Connecticut, Arizona and Illinois in April, defending its exclusive authority over registered markets.
That conflict extends beyond Connecticut. More than a dozen states have taken enforcement action or filed lawsuits against Kalshi over sports-related contracts, while a Washington court ordered the platform to stop offering prediction markets tied to sports, elections, politics, entertainment, culture, technology and science. Baltimore has also sued Kalshi and Polymarket, alleging that sports-event contracts amount to illegal gambling. The widening legal pressure shows that Kalshi’s national expansion is increasingly colliding with state-level efforts to define prediction markets through existing gambling rules. The Connecticut case lands within a national contest over prediction-market regulation and jurisdiction.
