Connecticut officials have taken prediction-market operator Kalshi to state court, asking a judge to halt what they describe as unlicensed sports betting offered through the company’s event contracts. Attorney General William Tong, Consumer Protection Commissioner Bryan T. Cafferelli, and Governor Ned Lamont announced the action on August 26, 2026.
The state is seeking an injunction that would stop Kalshi from advertising or making sports-related contracts available to Connecticut residents.
Officials argue these products function as sports wagers: users take positions on game winners, season win totals, point spreads, scoring outcomes, and individual player statistics.
In the state’s view, that activity is gambling and requires a license Kalshi does not hold.
The dispute dates to December 2025, when the Department of Consumer Protection’s Gaming Division sent cease-and-desist letters to Kalshi as well as Robinhood and Crypto.com.
Those notices directed the firms to stop offering sports event contracts, stop promoting them, and allow Connecticut customers to withdraw funds.
Kalshi immediately sued in federal court, claiming its contracts are federally regulated “swaps” under the exclusive authority of the Commodity Futures Trading Commission (CFTC) and that state gambling laws are preempted. In early August 2026, U.S. District Judge Vernon Oliver denied Kalshi a preliminary injunction.
The company has appealed to the Second Circuit.State leaders say the contracts expose consumers—especially young people—to the same harms regulated sports betting is designed to limit: underage access, problem gambling, weak data and fund protections, and marketing that reaches people on self-exclusion lists or college campuses.
Governor Lamont noted that Connecticut legalized sports wagering in 2021 specifically to create a licensed, supervised market rather than an unregulated free-for-all.
Tong has argued that labeling the products “event contracts” does not place them beyond the reach of state consumer-protection and gaming statutes.
Kalshi’s head of litigation, Jovy Dedaj, called the lawsuit “arbitrary and inconsistent enforcement,” pointing out that other prediction markets continue to operate in the state.
The company maintains that federal oversight of designated contract markets is necessary to avoid a patchwork of state rules.
The CFTC has separately sued Connecticut and other states on similar preemption theories; Connecticut has moved to dismiss that case.Sports contracts have become a large share of Kalshi’s listed products.
Licensed operators in Connecticut—DraftKings at Foxwoods, FanDuel at Mohegan Sun, and Fanatics through the lottery—must meet age, technical, and responsible-gaming requirements that the state says Kalshi does not.
The new Superior Court complaint in Hartford seeks both an injunction and disgorgement of revenues tied to the unlicensed activity.
The case adds another chapter to a nationwide fight over whether CFTC-regulated prediction markets must still obey state gambling laws when they list sports outcomes. Courts in several jurisdictions have so far sided with states on the sports-contract question.