Connecticut sued Kalshi on Aug. 26, asking a court to block the exchange from offering sports event contracts to state residents and to surrender revenue the state says came from illegal, unlicensed sports wagering. Kalshi removed the case from Hartford Superior Court to the U.S. District Court for the District of Connecticut the same day.
Attorney General William Tong, Gov. Ned Lamont and Department of Consumer Protection Commissioner Bryan T. Cafferelli announced the complaint in a Connecticut attorney general release. The state frames Kalshi’s yes-or-no sports contracts as sports betting under Connecticut law, not merely federally regulated derivatives. Kalshi’s answer is expected to track the position it has taken in related litigation: event contracts are swaps regulated by the Commodity Futures Trading Commission, and state gambling regulators are preempted.
What is Connecticut asking the court to do?
Connecticut wants an injunction barring Kalshi from offering sports event contracts in the state and disgorgement of revenue Kalshi received from Connecticut users. The complaint was filed in Hartford Superior Court as Connecticut v. KalshiEX, LLC, HHD-CV-26-6230345-S, before Kalshi removed it to federal court as case No. 3:26-cv-01382, according to the Prediction Market Litigation Tracker.
The state’s theory is straightforward: Connecticut legalized regulated sports wagering in 2021, built a licensing system around that market, and requires licensed operators to meet consumer-protection, age-verification, responsible-gambling and payment obligations. Kalshi, Connecticut says, has offered comparable sports wagers without joining that system.
Connecticut law requires a licensed master wagering licensee to pay the state 13.75% of gross gaming revenue from online or retail sports wagering, according to Conn. Gen. Stat. § 12-867. The same section directs the commissioner, for calendar months beginning on or after July 1, 2025, to deposit 2% of the state’s receipts under that section into the youth sports grant account. Separately, Conn. Gen. Stat. § 12-871 requires each master wagering license holder to contribute $500,000 per fiscal year to support problem-gambling programs, reduced pro rata if the license was not held for the full year.
The complaint asserts four counts: operating an unlicensed sports-wagering business, unfair trade practices tied to that alleged wagering, unfairness tied to underage gambling, and deception. It follows a December 2025 cease-and-desist order from the Department of Consumer Protection’s Gaming Division and Kalshi’s separate federal lawsuit seeking to block Connecticut enforcement.
Why does Connecticut focus on age?
The age question is central because Connecticut sports wagering is limited to people 21 and older, while Kalshi allows users who are at least 18 to open accounts. The state argues that this gap is not a minor compliance difference, but a core reason its licensed sports-betting framework exists.
The complaint alleges that Kalshi’s model gives younger users access to sports markets that Connecticut treats as sports wagering. It also points to marketing conduct the state says reached minors and college students. According to the complaint, Kalshi paid minors for promotional work, including a 15-year-old video-game streamer engaged as an affiliate, and used other promotional content on TikTok. Connecticut also cites a Kalshi Ambassador Program promoted on X in 2025 that the state says targeted students at Yale and other Connecticut colleges.
The state’s consumer-protection argument goes beyond age. In the attorney general’s announcement, Tong said sports event contracts are “no different than sports betting” and said Connecticut’s laws are designed to protect minors, problem gamblers, customer funds and personal information. That framing matters because Connecticut is not only challenging the label on Kalshi’s contracts. It is arguing that state gaming controls still apply when a sports prediction product reaches Connecticut customers.
How does this fit Kalshi’s federal preemption fight?
The Connecticut case is part of a broader fight over whether sports event contracts belong primarily to the CFTC or to state gambling regulators. Kalshi’s position is that its contracts are federally regulated swaps and that state enforcement conflicts with federal commodities law. States challenging the company argue that sports contracts function as sports betting and remain subject to their gambling statutes.
In Connecticut, that issue is already being litigated. Kalshi sued state officials after the Department of Consumer Protection’s December 2025 cease-and-desist order. Earlier in August, U.S. District Judge Vernon Oliver denied Kalshi’s motion for a preliminary injunction against Connecticut’s enforcement, according to the Connecticut attorney general’s office. Kalshi appealed to the Second Circuit, where the case is docketed as KalshiEX LLC v. Cafferelli, No. 26-2239, according to Justia’s federal appellate docket listing.
The CFTC is also in the middle of the dispute. The Connecticut attorney general’s office said the agency sued Connecticut and two other states while arguing that prediction markets should be regulated by the federal government rather than state gaming authorities. Connecticut has moved to dismiss that federal case, according to the attorney general’s release.
Those overlapping cases make the new complaint more than a local enforcement action. Connecticut is trying to recover money and impose state sports-betting rules. Kalshi is trying to move the dispute into the federal system and keep the central question focused on preemption under commodities law. The outcome could influence how other states approach sports event contracts offered by prediction-market exchanges.
What does Kalshi say?
Kalshi has described Connecticut’s enforcement as selective and inconsistent. Jovy Dedaj, Kalshi’s head of litigation, has characterized the state’s action as an attempt to shut the exchange down while other prediction-market operators continue to serve Connecticut users. The company’s broader position is that event contracts should be governed by one federal regulator, not a state-by-state gaming regime.
That argument has not resolved the Connecticut dispute. Judge Oliver’s denial of preliminary relief left state enforcement alive while the Second Circuit appeal proceeds. The new complaint adds a second front by seeking direct state-law remedies, including an injunction and disgorgement, based on alleged unlicensed sports wagering and underage access.
What happens next?
The next fight is procedural as well as substantive. The state complaint carried a Sept. 15 return date in Hartford Superior Court, but Kalshi’s Aug. 26 removal shifted the case to the U.S. District Court for the District of Connecticut. That puts the new enforcement action in federal court alongside the separate preemption fight already on appeal at the Second Circuit.
The immediate milestones are Kalshi’s response in the removed case, any Connecticut motion to send the case back to state court, and the Second Circuit’s handling of Kalshi’s appeal from Judge Oliver’s preliminary-injunction ruling. The same dispute sits behind each track: whether Connecticut can apply its sports-wagering laws to sports event contracts, or whether CFTC jurisdiction blocks that state enforcement.
