Connecticut is seeking to block Kalshi from offering sports-related prediction contracts to residents, escalating a legal dispute over whether the company’s products fall under federal commodities regulation or the state’s sports wagering laws.
The state filed its lawsuit Wednesday and is asking for a court injunction against Kalshi, alleging that the online prediction market is operating a sports wagering business without the required Connecticut license. Attorney General William Tong, Gov. Ned Lamont and Department of Consumer Protection Commissioner Bryan T. Cafferelli announced the action on Tuesday.
Kalshi operates an online exchange that allows users to buy contracts tied to yes-or-no outcomes involving future events. In sports, those contracts can cover whether a team or player will win, the number of games a team or player will win during a season, league rankings, point totals, point spreads and individual player statistics.
Connecticut officials argue that those products amount to gambling and not financial instruments. Tong said the protections imposed on licensed sports betting operators are also applicable to sports-related prediction contracts.
“Sports event contracts are no different than sports betting and are not magically shielded by federal law from Connecticut’s commonsense consumer protection laws,” the attorney general said. “These laws exist for a reason — to protect minors, to prevent problem gambling, to ensure your money is safe and your personal information is protected.”
Gov. Ned Lamont
Tong said those protections are not currently being provided on Kalshi and that the lawsuit is intended to stop the company’s operations in the state.
The dispute follows enforcement action taken by the Department of Consumer Protection’s Gaming Division in December 2025, when it ordered Kalshi and two other platforms to cease and desist from conducting unlicensed online gambling, specifically sports wagering, in Connecticut. The companies were also directed to withdraw money held on their platforms.
Cafferelli said the department has followed the development of prediction markets from their inception “with great concern for the potential negative impacts on the public.”
“These markets have been waging a coordinated campaign to convince people they are offering investments that are somehow safe when the reality is they are indistinguishable from sports wagering,” the commissioner said. “They target minors and individuals who have purposefully opted out, don’t adhere to any of our technical standards designed to protect consumers’ money and personal information, and violate all of Connecticut’s gaming laws.”
Connecticut just filed this lawsuit to shutdown @Kalshi immediately, but they’re okay with other prediction markets operating there in the meantime. This is the latest in a line of arbitrary and inconsistent enforcement by the states, which shows this has nothing to do with… pic.twitter.com/ZVnfeL4vnY
— Jovy Dedaj (@JovyDedaj) August 26, 2026
Kalshi challenged Connecticut’s enforcement action in federal court, arguing that its prediction contracts are “swaps” regulated exclusively by the federal Commodity Futures Trading Commission. The company sought a preliminary injunction preventing the state from enforcing Connecticut law.
Earlier this month, U.S. District Judge Vernon Oliver denied Kalshi’s request for a preliminary injunction. Kalshi subsequently appealed the decision to the Second Circuit Court of Appeals. A judge also denied Kalshi’s ex parte relief Wednesday, and an in-person status conference is scheduled for September 17.
The regulatory dispute has expanded beyond Connecticut. The CFTC has sued Connecticut and two other states, advancing the same position as Kalshi that prediction markets are subject to exclusive federal regulation. Connecticut has filed a motion seeking dismissal of that lawsuit.
“These prediction markets put Connecticut consumers, young people, our student athletes, and those suffering from gambling addiction at serious risk,” Gov. Lamont said. “They have made it clear their goal is profits over people, and that’s why we are holding them accountable.”
Kalshi’s head of litigation responded to the Connecticut lawsuit in a social media post Wednesday night, describing the state’s action as unequal treatment. The post said Connecticut was seeking to shut down Kalshi immediately while allowing other prediction markets to continue operating in the meantime and stated that “federal oversight is necessary.”