Kalshi Scores Temporary Win Against Connecticut Gambling Order
Prediction markets platform Kalshi has won a temporary reprieve from Connecticut regulators after being accused of running unlicensed online gambling.
A federal judge has blocked Connecticut from enforcing its cease-and-desist order while the court reviews Kalshi’s request for relief. The decision pauses state action as the legal fight over Kalshi’s status moves into early 2026.
Federal vs. State Oversight
Connecticut’s Department of Consumer Protection (DCP) issued notices on Dec. 2 to Kalshi, Robinhood, and Crypto.com, alleging the companies offered unlicensed sports wagering through “online sports event contracts.”
Kalshi quickly challenged the action, arguing that its event contracts fall under the Commodity Futures Trading Commission’s (CFTC) exclusive jurisdiction, not state gambling laws. On Monday, Judge Vernon Oliver ordered the DCP to hold off on enforcement while the case is under review.
The court has set deadlines for the case: the DCP must respond by Jan. 9, Kalshi will submit further arguments by Jan. 30, and oral arguments are expected in mid-February.
Nationwide Expansion Sparks State-Level Battles
Kalshi, recognized by the CFTC as a federally regulated contract market, began offering event-based contracts nationwide earlier this year, covering sports, weather, and political outcomes.
However, this expansion has sparked a wave of state-level challenges, with regulators arguing that Kalshi’s contracts resemble sports bets and violate gambling laws. Kalshi maintains that its products are federally regulated financial instruments, not wagers, and that state crackdowns violate the Commodity Exchange Act.
Connecticut is just the latest in a string of regulatory disputes. In October, Kalshi sued the New York State Gaming Commission over a similar cease-and-desist order. Earlier this year, the company faced legal action in Massachusetts, New Jersey, Nevada, Maryland, and Ohio, each time arguing that state regulators were overstepping their authority.
Kalshi’s Growth and Partnerships
Despite legal hurdles, Kalshi has made significant strides. The platform recently partnered with CNN, becoming the network’s official prediction markets partner. Real-time Kalshi market data will now support reporting on politics, economics, and major cultural events.
The company also closed a $1 billion funding round at an $11 billion valuation, following a surge in trading activity. Kalshi posted record trading volume of $4.54 billion in November, exceeding October’s $4.49 billion, with weekly volumes now surpassing $1 billion—a growth of over 1,000% since 2024.
Competitors are also seeing strong numbers. Polymarket recorded $3.76 billion in November after crossing $3 billion in October. Meanwhile, Galaxy Digital, led by Mike Novogratz, is reportedly in talks to become a liquidity provider for both Kalshi and Polymarket, signaling rising Wall Street interest in on-chain prediction markets.
