Federal judge Vernon D. Oliver denied prediction market Kalshi's motion to block Connecticut from enforcing its gambling laws. The court ruled that the platform's sports contracts are wagers, not swaps under the federal Commodity Exchange Act, and the state may apply its own regulation. Oliver rejected a similar motion from Coinbase the same day.
Kalshi argued its contracts qualify as swaps and are therefore protected by federal law. Oliver disagreed: the CEA refers to 'the occurrence or non-occurrence of the event', not its outcomes. A sporting event is the Kentucky Derby itself, not who wins it. Kalshi sells contracts on outcomes. 'These are essentially sports wagers,' the judge wrote, citing a Nevada court decision from last year.
At the 11 February hearing, sports contracts generated between 80% and 90% of Kalshi's revenue and made up the same share of its listings. The company was valued at $11bn. The Commodity Futures Trading Commission never reviewed a single Kalshi sports contract under a special CEA rule. Self-certification does not equal legal approval, Oliver noted, and the CFTC 'has historically not regulated sports wagering and has not exercised meaningful oversight' of Kalshi.
The Connecticut ruling extends a pattern at state level: every state court that has ruled on Kalshi sided with regulators. Federal courts are split — in February a Tennessee judge reached the opposite conclusion and granted Kalshi's motion. But the trend is clear: states can enforce their gambling laws on prediction markets that trade outcomes of sporting events.
