Connecticut has sued Kalshi and is seeking a court injunction to prevent the prediction market operator from offering unlicensed sports event contracts to state residents. Attorney General William Tong, Governor Ned Lamont and Department of Consumer Protection Commissioner Bryan T. Cafferelli announced the action.
Kalshi operates an online “event contract” exchange featuring yes-no propositions about future events. Its sports contracts cover outcomes such as whether a team or player will win, as well as other sports-related results. Connecticut officials consider these products sports wagering under state law.
State Challenges Kalshi’s Sports Contracts
The lawsuit follows enforcement action from December 2025, when the Department of Consumer Protection Gaming Division ordered Kalshi and two other platforms to stop conducting unlicensed online gambling, specifically sports wagering.
The order required the platforms to stop advertising, promoting, offering or otherwise making “sports event contracts” and other unlicensed gambling products available to Connecticut residents. They were also ordered to let residents withdraw funds held on the platforms.
Kalshi responded by suing the state. The company sought a preliminary injunction against enforcement of Connecticut law, arguing that its prediction contracts are “swaps” regulated solely by the federal Commodity Futures Trading Commission.
United States District Judge Vernon Oliver denied Kalshi’s motion earlier this month. The company has since appealed to the Second Circuit Court of Appeals.
Tong said Connecticut considers the contracts equivalent to sports betting and maintains that state gambling laws provide important consumer protections.
“Sports event contracts are no different than sports betting and are not magically shielded by federal law from Connecticut’s commonsense consumer protection laws. 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. None of that is happening now on Kalshi, and we’re suing to put a stop to it,” said Attorney General Tong.
Federal And State Regulators Remain Divided
Lamont also raised concerns about the effect of prediction markets on consumers and people affected by gambling addiction.
“These prediction markets put Connecticut consumers, young people, our student athletes, and those suffering from gambling addiction at serious risk. They have made it clear their goal is profits over people, and that’s why we are holding them accountable,” said Gov. Ned Lamont. “When we legalized sports wagering in 2021, the goal was to create a safe, responsibly regulated market for Connecticut consumers, not to open a free-for-all on sports betting.”
DCP Commissioner Bryan T. Cafferelli also commented.
“Our agency has been tracking the evolution of prediction markets from their inception, with great concern for the potential negative impacts on the public. […] 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. “
The CFTC has separately sued Connecticut and two other states, arguing that prediction markets should fall under federal regulation rather than state gambling laws. Connecticut has moved to dismiss that case.
New York and Kentucky have also sued Kalshi over the classification of its sports contracts.
Source:
“Connecticut Sues Kalshi to Stop Illegal, Unlicensed Sports Betting”, portal.ct.gov, August 26, 2026
The post Connecticut Takes Kalshi To Court Over Sports Contracts first appeared on RealMoneyAction.com.