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Key Takeaways
- Connecticut’s lawsuit asks a court to enforce its original order halting Kalshi’s sports contracts, arguing they function the same as sports betting
- Kalshi says it’s being singled out among similar platforms and calls its overall state-by-state legal record close to 50-50
- The CFTC has reversed its earlier stance and now sues states like Connecticut on Kalshi’s behalf, setting up an unresolved conflict between state gambling authority and federal commodities regulation
Connecticut has filed a lawsuit directly against Kalshi seeking to halt the company’s sports-related prediction markets in the state, becoming the latest entrant in a legal battle that now spans courts in nearly half the country.
The scattered and often contradictory rulings issued so far are fueling growing expectations among legal observers that the U.S. Supreme Court will eventually need to resolve the underlying question of who regulates event contracts.
A Long-Running Dispute Escalates Into a Direct Lawsuit
Connecticut’s conflict with Kalshi began in late 2025, when the state ordered the company to shut down its sports-related betting products, arguing the activity violated state gambling law. Kalshi sued Connecticut to block that order and initially lost in court, then appealed the ruling to the U.S. Court of Appeals for the Second Circuit, where the case remains pending.
As of Wednesday, Connecticut has taken a more direct step, formally suing Kalshi and asking a court to enforce the original order halting the company’s sports contracts in the state. Connecticut Attorney General William Tong said in a statement that sports event contracts function the same way as sports betting.
“Sports event contracts are no different than sports betting.”
Tong said the state’s consumer protection laws exist to guard against underage gambling, problem gambling, and risks to customers’ money and personal information. He argued those protections are not currently being enforced on Kalshi’s platform in Connecticut.
Kalshi Argues It Is Being Singled Out Among Similar Platforms
Kalshi has pushed back against Connecticut’s new lawsuit using an argument the company has raised in other states, including Washington: that regulators are targeting Kalshi specifically while leaving comparable prediction-market platforms alone.
Kalshi’s head of litigation, Jovy Dedaj, raised the claim directly in a post on the social platform X, noting that Connecticut’s suit seeks to shut down Kalshi immediately while other prediction markets continue operating in the state in the meantime.
Dedaj argued the pattern amounts to arbitrary and inconsistent state-level enforcement rather than a genuine consumer-protection effort, and said in a separate comment that the unequal treatment is exactly why federal oversight is necessary. According to Dedaj:
“Unequal treatment is exactly why federal oversight is necessary.”
In a separate online statement, Kalshi characterized its overall legal record across the various state disputes as currently close to 50-50, reflecting a genuinely mixed set of outcomes rather than a clear trend in either direction.
Federal and State Courts Have Split on the Underlying Question
The legal landscape surrounding Kalshi has produced inconsistent results depending on the court and the state involved. In April, the U.S. Court of Appeals for the Third Circuit blocked New Jersey from shutting down Kalshi’s sports-related markets, and a separate federal judge halted Arizona’s attempt to pursue criminal charges against the company.
In other states, Kalshi has had to cut off customer access entirely while litigation with those states and the Commodity Futures Trading Commission continues.
The Commodity Futures Trading Commission has separately sued Connecticut and other states, arguing that state governments have no authority over a platform the agency regulates federally.
Even among courts that have ruled against Kalshi, the legal reasoning behind those rulings has varied, according to the company’s own characterization of the case law so far.
A Reversed Federal Position Adds to the Uncertainty
The CFTC’s current stance marks a significant reversal from its earlier posture toward event-contract platforms, which it once challenged as unauthorized. That shift followed President Donald Trump’s appointment of Mike Selig to lead the agency.
Selig has become a vocal supporter of the prediction-market industry and has begun a formal rulemaking process aimed at establishing dedicated federal regulations for the sector.
States pursuing legal action against Kalshi have not backed down in the face of that federal rulemaking push, continuing to argue that the company’s event contracts function as gambling products regardless of how they are federally classified.
That unresolved conflict between state gambling authority and federal commodities regulation is what legal experts, and members of the CFTC itself, have pointed to as the likely driver of eventual Supreme Court involvement. However, the high court has not yet agreed to take up the issue.
What the Split Rulings Signal Going Forward
The current pattern, wins for Kalshi in some federal appeals courts, losses and forced shutdowns in certain states, and unresolved appeals such as Connecticut’s pending Second Circuit case, leaves the legal status of prediction markets unsettled on a state-by-state basis.
Until a higher court or Congress resolves the jurisdictional question directly, companies operating in this space are likely to continue facing a patchwork of enforcement actions that vary significantly depending on where their customers are located.
