Meta description: Connecticut’s Kalshi case asks whether state sports-betting law can reach CFTC-regulated sports event contracts from Kalshi and brokers.
Tags: Kalshi, Connecticut Department of Consumer Protection, CFTC, Robinhood, Crypto.com, sports event contracts
Market platform: Kalshi
Category: Regulation
Kalshi’s Connecticut fight is a federal preemption case, not a final ruling on whether sports event contracts are legal in the state. Connecticut’s Department of Consumer Protection ordered Kalshi, Robinhood Derivatives and Crypto.com to stop offering sports-linked products to Connecticut residents. Kalshi responded by asking a federal court to block state enforcement.
What is the Connecticut case about?
The case is KalshiEX LLC v. Cafferelli et al., No. 3:25-cv-02016, in the U.S. District Court for the District of Connecticut. Kalshi filed the lawsuit on December 3, 2025, one day after Connecticut regulators issued cease-and-desist letters targeting sports event contracts. The named defendants include Department of Consumer Protection Commissioner Bryan T. Cafferelli, Gaming Division Director Kristofer Gilman, the Connecticut Department of Consumer Protection and Attorney General William Tong, according to the federal docket published by Justia.
Kalshi’s complaint asks the federal court to stop Connecticut from enforcing state gambling law against its exchange-listed event contracts. The company argues that its markets are federally regulated contracts listed on a CFTC-registered designated contract market, not state-licensed sports wagers. Connecticut’s position is that when a product lets users take a position on sports outcomes, the state may regulate it as sports wagering unless the operator has the required gaming license.
Judge Vernon D. Oliver entered an interim order on December 8, 2025, requiring Connecticut officials to refrain from enforcement against Kalshi over conduct described in the December 2 cease-and-desist letter while the court considers Kalshi’s preliminary-injunction motion, according to the docket entry for ECF No. 35. The order preserved the status quo. It did not decide whether the Commodity Exchange Act preempts Connecticut’s sports-wagering laws.
What did Connecticut order Kalshi, Robinhood and Crypto.com to stop doing?
The Connecticut Department of Consumer Protection said in a December 3, 2025 release that its Gaming Division sent cease-and-desist orders to KalshiEX LLC, Robinhood Derivatives LLC and Crypto.com. The agency said all three were conducting unlicensed online gambling through sports wagering products and ordered them to stop advertising, offering, promoting or otherwise making sports event contracts available to Connecticut residents.
The agency framed the dispute as a licensing and consumer-protection matter. Commissioner Cafferelli said in the DCP release that only licensed entities may offer sports wagering in Connecticut and that none of the three companies held such a license. Gaming Director Kris Gilman said the platforms were operating outside Connecticut’s regulated sports-wagering system and described a prediction market wager as distinct from an investment.
DCP also cited specific state-law concerns. The minimum age for sports wagering in Connecticut is 21, licensed operators must follow technical and integrity standards, and the state reviews house rules and consumer protections for regulated betting platforms. The agency said unlicensed platforms may expose consumers to financial and data risks and may allow wagers on events where insiders could have special knowledge.
Connecticut’s licensed sports-wagering operators are DraftKings through Foxwoods, FanDuel through Mohegan Sun and Fanatics through the Connecticut Lottery, according to the same DCP release. The state said failure to comply with the cease-and-desist orders could lead to civil penalties under the Connecticut Unfair Trade Practices Act or criminal penalties under gaming statutes.
What has the federal court done so far?
The docket shows Kalshi moved for a preliminary injunction on December 5, 2025, at ECF No. 30. Judge Oliver set a briefing schedule, required Connecticut’s response by January 9, 2026, and set oral argument for February 2026. The docket lists a motion hearing held on February 11, 2026, with a transcript filed on February 18.
The docket also shows supplemental filings after the hearing. Kalshi filed notices of supplemental authority in February, April and May 2026, and sought judicial notice in March. Law360’s case tracker reported on July 14, 2026, that Judge Oliver rejected Kalshi’s request to have the court consider CFTC collaboration materials involving Major League Baseball and other leagues in the Connecticut case.
That procedural record matters because Connecticut sits in the Second Circuit, where similar state-law fights are moving in parallel. A ruling in Connecticut could affect Kalshi’s sports event contracts in the state and shape how other CFTC-regulated prediction platforms and brokerages assess gaming-law exposure in the region.
How does Connecticut fit into the broader Kalshi litigation map?
Kalshi’s state-regulator litigation has produced mixed results, not a uniform line of wins for either side. In New Jersey, the federal district court granted Kalshi injunctive relief against gaming regulators in April 2025. On April 6, 2026, the U.S. Court of Appeals for the Third Circuit affirmed that preliminary injunction in KalshiEX LLC v. Flaherty, holding that Kalshi was likely to succeed on its preemption arguments at that stage of the case.
In Tennessee, the Middle District of Tennessee granted Kalshi preliminary relief against individual state officials in February 2026 while denying relief against the state agency defendant on sovereign-immunity grounds, according to the published order in KalshiEX LLC v. Orgel. Those rulings gave Kalshi meaningful early wins, but they did not settle the national question.
Other courts and regulators have moved in the opposite direction. In Maryland, a federal court denied Kalshi’s request for preliminary relief in 2025, reasoning that Congress had not clearly displaced state gambling authority through the Commodity Exchange Act. In Massachusetts, Attorney General Andrea Joy Campbell said on January 20, 2026, that her office had secured a preliminary injunction prohibiting Kalshi from accepting online sports wagers and related event contracts from Massachusetts customers unless it complies with state sports-gaming laws, including licensure by the Massachusetts Gaming Commission.
Nevada has also shifted through several postures. The Nevada Gaming Control Board’s public timeline says the federal district court granted Kalshi a preliminary injunction on April 9, 2025, preventing NGCB from enforcing Nevada gaming law against Kalshi. The same timeline says the federal district court dissolved Kalshi’s preliminary injunction on November 25, 2025. It also lists a March 20, 2026 state-court temporary restraining order against Kalshi and an April 3, 2026 state-court preliminary injunction barring Kalshi from offering prohibited event contracts in Nevada.
The result is a fragmented national map. The same basic sports-linked event contract can face different treatment depending on the forum, the procedural posture and the court’s view of whether the Commodity Exchange Act leaves room for state gambling enforcement.
Why does the Connecticut dispute matter for prediction markets?
The Connecticut case goes to the industry’s operating model. Kalshi’s business depends on listing contracts through a federally regulated exchange structure that can reach users across states. State gaming regulators are pressing the opposite framework for sports markets: if the contract tracks a sports outcome and is offered to residents of a state, the operator must comply with that state’s sports-wagering licensing, age, integrity and consumer-protection rules.
That conflict is especially relevant for companies that route prediction-market access through regulated derivatives infrastructure. Robinhood Derivatives and Crypto.com received Connecticut cease-and-desist letters alongside Kalshi, making the state’s action broader than a single-platform dispute. If Connecticut’s theory prevails, sports event contracts could face sportsbook-style licensing requirements in at least some states. If Kalshi’s theory prevails, state gambling regulators would have less room to block federally listed sports-event markets.
The next concrete milestone is Judge Oliver’s ruling on Kalshi’s preliminary-injunction request in KalshiEX LLC v. Cafferelli, No. 3:25-cv-02016. Until the court resolves that motion, Connecticut’s December 2025 enforcement push remains paused as to Kalshi under the federal court’s interim order, while the underlying clash between state sports-betting law and CFTC-regulated event contracts continues.
