Connecticut Sues Kalshi Over Unlicensed Sports Betting Amid CFTC Preemption Fight
Connecticut's AG sued Kalshi for allegedly running unlicensed sports wagering, escalating a multi-state fight over whether prediction-market event contracts are swaps under exclusive CFTC jurisdiction or unlawful state-regulated gambling.
Connecticut Attorney General William Tong, Governor Ned Lamont, and Department of Consumer Protection Commissioner Bryan T. Cafferelli sued Kalshi in state court, seeking an injunction to halt alleged unlicensed online sports wagering offered to Connecticut residents. The action follows a December 2025 cease-and-desist order from the DCP Gaming Division, which had already directed Kalshi and two affiliated sites to stop sports event contracts and advertising to in-state users and to allow fund withdrawals. Kalshi had preemptively sued the state and moved for a preliminary injunction, contending its event contracts are commodity 'swaps' within the CFTC's exclusive jurisdiction. Earlier this month, U.S. District Judge Vernon Oliver denied that motion; Kalshi has appealed to the Second Circuit. The CFTC has separately sued Connecticut and two other states, asserting sole federal authority over the products. Sophisticated fintech, gaming, and consumer-protection counsel should track the Second Circuit's preemption analysis, any parallel state-court rulings, and the operating risk for prediction-market platforms facing multi-state enforcement while the federal-state boundary remains unsettled.