A federal court in Connecticut denied prediction market operator Kalshi's request to block state officials from enforcing gambling laws against the company's sports event contracts. Judge Vernon D. Oliver ruled that Kalshi's products do not qualify as swaps under the federal Commodity Exchange Act (CEA), the statute the company had invoked.
'Kalshi's sports event contracts do not depend on whether or not an underlying event occurs. Instead, they depend on the outcomes of events or specific in-game occurrences,' the judge wrote. Oliver added that even if Kalshi's contracts did qualify as swaps, Connecticut gambling law would not conflict with federal statute. He noted that sports wagering has traditionally been regulated by states, and that Kalshi itself had marketed the platform as 'legal sports betting nationwide'.
Connecticut's Department of Consumer Protection previously issued cease-and-desist notices to Kalshi, Robinhood and Crypto.com, citing the offer of sports wagering without state licences. Kalshi filed a counter-suit against the department and its commissioner Kristofer Gilman, seeking injunctions. A Kalshi spokesperson said the company disagrees with the ruling and is considering its options for appeal.
The Connecticut decision follows similar rejections in Wisconsin, Utah and New York. Prediction market operators are facing mounting pressure from state regulators seeking to apply local gambling law.
