Prediction markets platform Kalshi has won a temporary pause on enforcement actions from Connecticut regulators after filing a lawsuit challenging state claims that its event-based contracts constitute illegal gambling. US District Judge Vernon Oliver ordered the Department of Consumer Protection (DCP) to refrain from taking action while the court reviews Kalshi’s request for preliminary relief. The ruling follows DCP’s cease-and-desist notices issued on December 2 to Kalshi, Robinhood, and Crypto.com over alleged unlicensed sports-related wagering.
Kalshi contends that its markets, which allow trading on outcomes of future events, are federally regulated derivatives products overseen by the Commodity Futures Trading Commission. The company obtained designated contract market status from the CFTC in 2020 and argues that Connecticut’s gambling laws are preempted by federal regulation. The lawsuit also seeks to prevent state action that could disrupt operations.
Under the court schedule, Connecticut must respond to Kalshi’s complaint by January 9, 2026, with the company filing additional arguments by January 30. Oral arguments are expected in mid-February. The decision provides temporary relief but signals an ongoing legal confrontation between state authorities and federally regulated derivatives platforms. Kalshi has faced similar challenges this year in Arizona, Illinois, Montana, and Ohio, highlighting broader tension between state gambling regulations and federal oversight of digital and event-based trading markets.
