Connecticut sues Kalshi over alleged unlicensed sports betting

Connecticut has sued Kalshi to block the platform from offering sports event contracts in the state, arguing that the products are just sports betting with a different label. For payment and risk teams in high-risk verticals, the interesting bit is the jurisdiction fight: if the state gets its way, these contracts fall under Connecticut gaming law, not just federal commodities oversight.

1. Attorney General William Tong, Governor Ned Lamont, and Department of Consumer Protection commissioner Bryan T. Cafferelli announced the lawsuit, and the state is seeking a court injunction to stop Kalshi from offering sports event contracts in Connecticut.
2. Connecticut says Kalshi’s sports-related contracts are gambling because they track outcomes such as whether a team or player will win a sporting event or series, the number of wins a team records during a season, league ranking, points scored, point spreads, and individual player statistics.
3. The state argues that these products should comply with Connecticut’s gaming laws and that federal oversight does not stop Connecticut from enforcing its consumer protection rules, including protections for minors, people affected by problem gambling, consumer funds, and personal information.
4. The dispute sits inside a broader legal fight over whether prediction markets offering sports contracts are regulated by state gambling authorities or by the federal financial markets framework. Last December, Connecticut’s Department of Consumer Protection sent Kalshi and two other platforms cease-and-desist letters demanding that they stop offering, promoting, or making unlicensed online gambling available to people in Connecticut and let Connecticut customers withdraw funds held in their accounts.
5. Kalshi sued Connecticut in response, saying its prediction contracts are financial instruments regulated exclusively by the Commodity Futures Trading Commission (CFTC). Earlier in August, a US district judge denied Kalshi’s request for a preliminary injunction against enforcement of Connecticut law, and Kalshi has appealed that decision to the Second Cir.