Connecticut is suing Kalshi, asking a state court to stop the prediction market from offering sports contracts to residents without a gambling license.
Attorney General William Tong announced the lawsuit Wednesday alongside Department of Consumer Protection Commissioner Bryan T. Cafferelli and Gov. Ned Lamont. Connecticut wants an injunction blocking Kalshi from continuing to offer contracts that officials consider unlicensed sports betting.
On Kalshi’s exchange, customers trade yes-or-no contracts tied to future events. Its sports markets can involve game and season winners, league standings, win totals, point spreads, scores and individual player statistics.
State officials argue those products function as sports wagers, meaning Kalshi must follow Connecticut’s gambling licensing requirements and consumer safeguards. According to the complaint, Kalshi has made sports contracts available to Connecticut residents through its website, app and other channels since January 2025 without obtaining or seeking a Department of Consumer Protection license.
“Sports event contracts are no different than sports betting and are not magically shielded by federal law from Connecticut’s commonsense consumer protection laws,” said Attorney General Tong.
Connecticut sues Kalshi as federal challenge fails to halt gambling enforcement
Connecticut regulators sent cease-and-desist notices to Kalshi, Robinhood and Crypto.com in December 2025, accusing the platforms of offering unlicensed online gambling.
Regulators told the companies to stop promoting or providing sports event contracts and other unauthorized gambling products in Connecticut. The orders also required them to allow customers in the state to withdraw money from their accounts.
Kalshi sued Connecticut in response, arguing that its event contracts are federally regulated derivatives and that the Commodity Futures Trading Commission has exclusive authority over them under the Commodity Exchange Act.
U.S. District Judge Vernon Oliver rejected Kalshi’s request for a preliminary injunction earlier in August. Kalshi appealed to the Second Circuit and sought temporary protection from Connecticut enforcement while that appeal proceeded.
On August 19, Circuit Judge Sarah A. L. Merriam denied that temporary request. The appeals court left Kalshi’s broader injunction motion for a three-judge panel to consider and did not decide the underlying dispute.
The CFTC has separately sued Connecticut and two other states, similarly arguing that federal law gives the commission exclusive authority over prediction markets. Connecticut has moved to dismiss that case.
Connecticut’s latest complaint also takes aim at Kalshi’s marketing. Officials allege the company characterized its activities as “legal in all 50 states” while presenting sports contracts as both investments and lawful alternatives to licensed sportsbooks.
The state says its gambling framework provides protections covering minors, problem gambling, customer money and personal data. Connecticut legalized regulated sports betting in 2021.
Featured image: Kalshi / Canva
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