After months of battling Kalshi in court, Connecticut officials are now seeking to block the prediction market operator from offering sports event contracts in the state and impose financial penalties.
Key Takeaways
- Connecticut officials believe sports contracts amount to illegal betting.
- The state is seeking a ban, restitution, and civil penalties.
- Kalshi sued Connecticut in late 2025.
Attorney General William Tong, Department of Consumer Protection commissioner Bryan T. Cafferelli, and Governor Ned Lamont announced Thursday that the state filed a lawsuit against Kalshi, seeking injunctive relief to block the site from offering sports event contracts in the jurisdiction.
Connecticut is also seeking disgorgement, restitution, and civil penalties, alleging that Kalshi's sports contracts constitute illegal sports wagering subject to state law.
“Sports event contracts are no different than sports betting and are not magically shielded by federal law from Connecticut’s commonsense consumer protection laws,” Tong said in a statement. “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.”
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Connecticut escalates Kalshi fight
Connecticut, which offers legal sports betting that is regulated by the state, sent Kalshi, Robinhood, and Crypto.com, three other sites that have sports event contracts, cease-and-desist letters in late 2025.
Kalshi immediately responded by suing Connecticut, arguing its sports contracts are “swaps,” not bets, and only the federal agency Commodity Futures Trading Commission (CFTC) can regulate prediction markets. The state has requested the lawsuit be dismissed.
The CFTC also sued Connecticut, Illinois, and Arizona on the same day in April, arguing that state efforts to restrict federally regulated prediction markets were preempted by federal law.
However, Kalshi lost a court decision earlier this month when a Connecticut judge ruled that sports contracts aren’t swaps, denying the operator’s preliminary injunction request. Kalshi has appealed the ruling.
“These prediction markets put Connecticut consumers, young people, our student athletes, and those suffering from gambling addiction at serious risk,” Lamont said. “They have made it clear their goal is profits over people, and that’s why we are holding them accountable.”
Connecticut is one of more than a dozen U.S. states that have challenged prediction markets in court, with the state-versus-federal jurisdiction issue at the center of several cases.
Kalshi recently restricted certain markets in Washington to avoid punitive measures. In other prediction market news, the operator agreed to implement a geofencing solution to keep Nevada residents from accessing markets to avoid facing a $120,000 daily fine imposed by regulators.
Connecticut has filed a civil enforcement action against Kalshi in Hartford Superior Court, seeking injunctive relief, disgorgement, restitution and civil penalties against Kalshi for operating an illegal sports wagering service. Case removed to federal court by Kalshi. pic.twitter.com/6O7K4MMbKE
— Daniel Wallach (@WALLACHLEGAL) August 27, 2026
State targets Kalshi's business
In the state’s recent lawsuit, Connecticut notes Kalshi has accepted over $178 billion in trades, much of that from sports, and boasts a $22-billion valuation.
State officials take exception to Kalshi “deceptively marketing its sports wagers as lawful alternatives to regulated, licensed sportsbooks, even as investments.” Cafferelli said the DCP, which regulates sports betting in Connecticut, has studied prediction markets since their inception and considers them a potential threat to consumers.
“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,” Cafferelli 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.”
Age becomes another battleground
The lawsuit also points to Kalshi allowing users 18 and older to trade contracts, while Connecticut requires bettors to be at least 21 to use licensed sports betting platforms. The suit states Kalshi has marketed on college campuses and has offered contracts on college teams in Connecticut, which sports betting operators are not permitted to post.
“Kalshi specifically allows minors to create accounts and place wagers on sporting events,” the lawsuit states. “This means that many high school students may make Kalshi accounts and wager on sports.”
