Stop me if you’ve heard this one before. Kalshi sued Connecticut on Wednesday after the CT Department of Consumer Protection Gaming Division sent cease and desists to Kalshi, Robinhood and Crypto.com. Kalshi filed suit in the U.S. District Court, requesting permanent injunctive and declaratory relief based on “the State of Connecticut’s intrusion into the federal government’s exclusive authority to regulate derivatives trading on exchanges overseen by the Commodity Futures Trading Commission.”
It’s the same federal preemption argument, based on the Commodity Exchange Act (CEA), Kalshi has leaned on in many of its other ongoing suits against state regulators. The states engaged in litigation against Kalshi and other exchanges claim that sports event contracts amount to an unauthorized form of sports betting, which they say only states have the authority to regulate.
While many of the details are similar to what we’ve seen in other cases, this one is unique in that Connecticut is not just challenging sports outcome offerings; CT is also coming for a sub-set of cultural markets.
Connecticut arguments target more than sports
CT regulators assert in their press release that “Only licensed entities may offer sports wagering in the state of Connecticut” and that:
“None of these entities possess a license to offer wagering in our state, and even if they did, their contracts violate numerous other state laws and policies, including offering wagers to individuals under the age of 21.”
Another state law Connecticut regulators allege prediction market platforms are breaking is a prohibition against “wagers on events where the outcome is known by many people, such as award shows, professional team trades, and other events.” This claim challenges several cultural and sports-adjacent markets that continue to gain in popularity among traders. Kalshi’s market for who would win Dancing with the Stars Season 34 posted north of $5.5 million, just one of many examples of contracts that CT is claiming are out of bounds within its state borders.
The DCP also claims that these platforms have “no integrity controls in place,” and that they unlawfully advertise to individuals on the state’s Voluntary Self-Exclusion List (for gambling) and on college campuses.
The letters demand that the platforms immediately halt contract offerings and their promotion and it threatens “civil penalties under the Connecticut Unfair Trade Practices Act and/or criminal penalties for violations of Connecticut’s gaming statutes” if they fail to comply.
Kalshi vs. Connecticut: What’s next?
Kalshi is suing not only the Department of Consumer Protection but also the department’s commissioner (Bryan T. Cafferelli), the department’s Director of Gaming Kristofer Gilman, and the state’s Attorney General William Tong.
In the complaint, Kalshi relies on on prior CEA-based and irreparable harm arguments, and cites a previous ruling from New Jersey which allowed Kalshi to continue offering its sports contracts while the case plays out. Nevada had issued a similar ruling, but that was recently reversed. Meanwhile, Crypto.com and Robinhood have already pulled their sports contracts in Nevada.
The case has already been assigned, gaming lawyer Daniel Wallach reported on LinkedIn:
“The Kalshi v. Connecticut case has been assigned to U.S. District Judge Vernon D. Oliver, a Biden appointee who was a CT Superior Court judge for 14 years, an Assistant State Attorney with CT Division of Criminal Justice and Assistant AG in the Child Protection Bureau of the AG’s Office. No objection from State of Connecticut.”
Wallach also noted that Kalshi intends to seek an emergency temporary restraining order (TRO) and preliminary injunction.
Connecticut is the tenth state to issue a C&D to Kalshi and/or other prediction market platforms, and it’s the sixth state Kalshi has sued. Those states include:
- Nevada
- New Jersey
- Maryland
- Ohio
- New York
- Connecticut
And there’s Massachusetts, which struck first and filed suit against Kalshi.
Speaking of MA, the state has filed a loaded reply brief which will be heard Tuesday, per Wallach.
NEW: Massachusetts files reply brief in further support of motion for preliminary injunction, which is being heard Tuesday AM in Suffolk County Superior Court, points out that Kalshi “does not contest that the sports wagers it offers violate MA law.” Searing intro by @MassAGO: pic.twitter.com/Rbr3SqvoIE
— Daniel Wallach (@WALLACHLEGAL) December 4, 2025
