Connecticut judge rejects Kalshi bid to block state gambling laws

A federal judge in Connecticut has denied Kalshi’s request for a preliminary injunction, finding that its sports-event contracts are not swaps under the Commodity Exchange Act (CEA). For high-risk operators and payment providers, the practical point is simple: the legal framing of prediction-market products still matters a lot, and state gambling law is not going away just because a platform says “swap.”

1. U.S. District Judge Vernon D. Oliver ruled that Kalshi was unlikely to succeed on its core arguments against Connecticut. He said the company’s sports-event contracts do not qualify as swaps under federal commodities law, and that federal law does not pre-empt Connecticut’s gambling regulations.
2. “Kalshi characterises its sports-related event contracts in various ways, but at bottom, they are sports wagers,” Oliver wrote, citing a prior Nevada ruling against the company. That puts this decision into a wider pattern: more courts are rejecting Kalshi’s main legal theory, even though federal courts have not lined up uniformly across similar cases.
3. Oliver’s reading of the CEA turned on the statute’s use of the terms “occurrence” and “event.” In his view, an event is about whether something happens and the extent to which it occurs, not the possible outcomes inside that event. He said Kalshi’s contracts depend on sporting outcomes or individual in-game occurrences, rather than on whether an underlying event occurs, and that they are not tied to a potential financial, economic or commercial consequence as the CEA requires.
4. The judge also rejected Kalshi’s pre-emption argument. Even if the contracts were treated as swaps, he said, the CEA would not stop Connecticut from enforcing its gambling laws. He pointed to the CEA’s gaming provisions and its targeted state-law pre-emption language, concluding that Congress did not intend to take over this field of state regulation.
5. Oliver further said Connecticut’s rules do not conflict with CFTC impartial market access requirements. In his view, those rules do not require Kalshi to offer its contracts nationwide. The court’s bottom line was that Connecticut’s gambling laws “complement rather than conflict with federal law.”