Prediction markets platform Kalshi has secured a temporary pause on enforcement actions from Connecticut regulators, marking a key development in its escalating legal fight. The state's Department of Consumer Protection (DCP) issued cease-and-desist notices on December 2 to Kalshi, Robinhood, and Crypto.com, alleging the companies were offering unlicensed sports wagering.
In response, Kalshi filed a lawsuit against Connecticut authorities the following day, arguing its event-based contracts are regulated derivatives products overseen by the Commodity Futures Trading Commission (CFTC). The company, which was granted designated contract market status by the CFTC in 2020, contends that Connecticut's gambling laws do not apply and that the state is overstepping its authority.
U.S. District Judge Vernon Oliver issued an order on Monday directing the DCP to refrain from pursuing enforcement action against Kalshi while the court reviews the company's request for preliminary relief. The judge set a schedule requiring Connecticut regulators to respond to Kalshi's complaint by January 9, 2026, with Kalshi due to file additional supporting arguments by January 30. Oral arguments are expected in mid-February.
Kalshi's legal filing stated, "Connecticut's attempt to regulate Kalshi intrudes upon the federal regulatory framework that Congress established for regulating derivatives on designated exchanges." The platform has seen massive growth, reporting a record $4.54 billion in monthly trading volume in November and recently closing a $1 billion funding round at an $11 billion valuation.
This case is part of a broader pattern of conflict between Kalshi and state regulators. The company has faced similar pushback and is engaged in legal battles with authorities in several states including Arizona, Illinois, Montana, Ohio, New York, New Jersey, Nevada, Maryland, and Massachusetts.
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