Connecticut Attorney General William Tong has filed a lawsuit seeking to block Kalshi from operating in the state. Authorities argue that Kalshi's sports-event contracts are unlicensed sports betting disguised as derivatives.
'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. Kalshi immediately removed the case to federal court, its standard strategy in all disputes. But the tactic is failing: of 21 court decisions, 17 have gone against the platform.
In early October, federal judge Vernon Oliver denied Kalshi's motion for an injunction in Connecticut. He rejected the company's argument that its sports contracts fall under the definition of swaps in the Commodity Exchange Act. Kalshi has appealed to the Second Circuit. Similar rulings have been handed down in Maryland, Nevada, Massachusetts, Washington, Michigan, New York, Ohio, Arizona and Utah.
Player-protection complaints
The lawsuit lists violations: Kalshi accepts users from age 18, offers no responsible-gambling tools, does not disclose financials to independent auditors, opens markets on Connecticut college sports and positions the product as investment, not betting. In one Instagram campaign, the company called itself 'the first legal sports betting platform nationwide'.
Trading volumes rising amid litigation
Kalshi's trading volume for the year to April reached $178 billion, a 32-fold increase. From April to the present, another $138 billion has traded, with 83% ($114.7 billion) coming from sports. On Tuesday the company disclosed a $1.1 billion funding round in SEC filings. Part of the capital is going to advertising, lobbying and sponsorship deals — this week Kalshi announced agreements with five MLB clubs, including the Boston Red Sox.
