Connecticut judge denies Kalshi injunction, rules sports contracts are not swaps
On August 10, U.S. District Judge Vernon Oliver denied Kalshi's request for a preliminary injunction blocking Connecticut from enforcing its gambling laws against the prediction market platform. Oliver ruled that Kalshi's sports event contracts are wagers, not federally regulated swaps, and that federal law does not preempt state gambling enforcement. The decision allows Connecticut's cease-and-desist action to proceed while the underlying case continues. Kalshi has since filed an appeal and asked the appeals court to block enforcement during that process.
Each state court loss forces Kalshi into the same costly choice: build state-specific geofences or risk voiding open contracts under local gambling law. Connecticut traders now face the same geography-dependent validity that already hits Kalshi users in Washington, Wisconsin, New York, and Utah. The platform's national expansion assumed CFTC registration would block state enforcement.
That assumption is collapsing market by market. Legal spend stacks across parallel cases with no uniform standard in sight. The appeals pipeline offers the only path to clarity, but circuit splits take months or years to resolve. Kalshi's appeal in Connecticut joins a crowded docket, and every new filing stretches compliance resources thinner.
Connecticut becomes the sixth state to reject Kalshi's federal preemption defense, after Wisconsin, New York, Utah, Washington, and now Connecticut itself, cementing the pattern that CFTC registration does not block state gambling enforcement.