The Connecticut Department of Consumer Protection (DCP) issued notices on 2 December to Kalshi, Robinhood, and Crypto.com, alleging the companies were enabling unlicensed online gambling by offering sports-related event contracts to state residents.
Regulators said the activity effectively amounted to unauthorised sports wagering under Connecticut law.
Kalshi filed suit against the DCP the following day, arguing that its event contracts fall under the Commodity Futures Trading Commission’s (CFTC) exclusive jurisdiction and are lawful at the federal level.
The company contended that only the CFTC can regulate these markets, placing an onus on the court to determine whether Connecticut can proceed with enforcement.
US District Judge Vernon Oliver ordered the DCP on Monday to pause enforcement while the court reviews Kalshi’s request for temporary injunctive relief.
He directed the state to submit its response by 9 January next year and instructed Kalshi to file its follow-up brief by 30 January.
The court scheduled oral arguments for 12 February.
Legal battles may need higher court intervention
The Connecticut case adds to a widening list of state challenges facing Kalshi, including active disputes in Nevada and Ohio. Massachusetts has also intensified its review of the company’s operations.
During a hearing this week, Suffolk County Superior Court Judge Christopher Barry-Smith questioned whether residents could legally place financially settled bets on sporting outcomes without triggering state gaming restrictions.
Lawyers for Massachusetts argued that Kalshi is effectively operating an unlicensed sportsbook and offering a potentially harmful product to consumers as young as 18.
Kalshi maintains that prediction markets function as federally overseen financial instruments rather than gambling products, a stance other operators in the sector share.
Some states have rejected that interpretation, creating a regulatory disagreement that continues to deepen.
In a recent discussion with Stifel analyst Jeffrey Stantial, Andrew Kim, a partner at Goodwin Proctor LLP, noted that the dispute may ultimately require US Supreme Court review to resolve. However, no such petition has been filed yet.
Dingnews.com 11/12/2025