Connecticut has filed a lawsuit against prediction market platform Kalshi, seeking a court order to stop the company from offering sports-related event contracts to residents. State officials argue that these contracts are effectively sports bets and therefore require the same licenses and consumer protections that apply to sportsbooks operating in Connecticut.
Attorney General William Tong, Governor Ned Lamont, and Department of Consumer Protection Commissioner Bryan Cafferelli contend that Kalshi is providing sports wagering services without the licenses required under state law. Connecticut legalized sports betting in 2021 under a regulated framework that includes age restrictions, consumer safeguards, and oversight requirements.
Kalshi disagrees with the state’s position. The company argues that its event contracts are federally regulated derivatives and fall under the exclusive authority of the U.S. Commodity Futures Trading Commission (CFTC). As a designated contract market regulated by the CFTC, Kalshi maintains that states cannot apply their gambling laws to its products.
The dispute began in December 2025 when Connecticut regulators ordered Kalshi, Robinhood, and Crypto.com to stop offering sports event contracts to state residents. Kalshi challenged the order in federal court, but earlier this month a federal judge denied the company’s request for a preliminary injunction that would have blocked state enforcement actions. Kalshi has since appealed that ruling to the U.S. Court of Appeals for the Second Circuit.
The legal battle is part of a broader nationwide conflict over prediction markets. Several states, including New York and Washington, have taken action against Kalshi’s sports contracts, arguing that they function like traditional sports betting. Courts in those states have so far allowed regulators to continue enforcement efforts while the cases proceed.
Meanwhile, the CFTC and the U.S. Department of Justice have filed separate lawsuits against several states, arguing that federally regulated prediction markets fall under federal jurisdiction and should not be restricted by state gaming authorities.
At the center of the dispute is a key legal question: Are sports event contracts federally regulated financial products, or are they simply another form of sports wagering subject to state gambling laws? The answer could shape the future of prediction markets across the United States.
For now, Connecticut’s lawsuit will move forward while Kalshi’s appeal and related federal cases continue through the courts.
