Connecticut sued Kalshi on Wednesday, aiming to shut down the prediction-market operator’s sports-related event contracts. The move reopens a months-old dispute: does a federal derivatives license let the exchange ignore state gambling law, or doesn’t it?
Attorney General William Tong wants a court injunction forcing Kalshi to stop what Connecticut considers unlicensed sports wagers. The filing landed in state civil court. It is the second action the state has taken against Kalshi in nine months, and it arrives alongside more than a dozen similar enforcement efforts nationwide.
“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 a statement.
Governor Ned Lamont, named in the filing alongside Tong, pointed to the 2021 state law that legalized sports wagering under a regulated framework. “When we legalized 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,” Lamont said.
That 2021 framework anchors the state’s case. Connecticut contends Kalshi’s contracts are functionally identical to the bets it already licenses and taxes through regulated sportsbooks. The practical upshot: the suit asks a state judge to treat a CFTC-regulated market as an unlicensed gambling operation.
Kalshi rejects the premise entirely. The Commodity Futures Trading Commission gave the exchange designated contract market status in 2020. Since then, Kalshi has staked its nationwide legal position on one argument: federal derivatives oversight preempts state gambling law. Jovy Dedaj, the company’s Head of Litigation, called the Connecticut suit “the latest in a line of arbitrary and inconsistent enforcement.” The state, he said, is “okay with other prediction markets operating there in the meantime.”
“This unequal treatment is exactly why federal oversight is necessary,” Dedaj wrote on X.
The timeline is crowded. In December 2025, Connecticut’s Department of Consumer Protection told Kalshi, Robinhood, and Crypto.com to stop promoting or offering sports event contracts. Kalshi sued state officials the next day. Its argument: these markets are CFTC-regulated derivatives, and state gambling statutes cannot touch them. Earlier this month, Judge Vernon Oliver denied Kalshi’s motion for a preliminary injunction to block that enforcement. Kalshi appealed to the Second Circuit.
The federal regulator has jumped in, too. In April, the CFTC sued Connecticut, Arizona, and Illinois. States, the agency argued, cannot outlaw contracts listed on a CFTC-registered designated contract market. CFTC Chair Michael Selig said the agency “will continue to safeguard its exclusive regulatory authority over these markets and defend market participants against overzealous state regulators.”
That federal suit remains pending. So does Kalshi’s Second Circuit appeal. Both will determine whether the preemption argument Kalshi relies on survives judicial review.
Connecticut is hardly alone in pushing back. Earlier in August, a Washington court ordered Kalshi to stop offering prediction markets tied to sports, elections, politics, entertainment, culture, technology, and science within that state. Days before that, Baltimore sued both Kalshi and Polymarket, claiming their sports-event contracts are illegal gambling. The Connecticut filing pushes the state-level counteroffensive into its second year. A decisive ruling on the core preemption question has not arrived.
What the complaint does not spell out, at least in what has been publicly disclosed, is which specific sports contracts are at issue. The filing is public, but the enumerated markets were not detailed in the reporting. Which rival prediction platforms Dedaj says are operating unchallenged in the state also goes unnamed.
The Block said it reached out to Kalshi for further comment beyond Dedaj’s post.
For now, the case sits in a familiar holding pattern. Connecticut wants its gambling statute enforced. Kalshi insists its federal license means what it says. A court, not the CFTC, will decide who reads the law correctly.
