Connecticut has escalated its legal confrontation with Kalshi by filing a new enforcement lawsuit aimed at halting the prediction market operator's sports contracts and reclaiming revenue generated within the state.
The lawsuit, initiated by Attorney General William Tong and the Connecticut Department of Consumer Protection (DCP), was filed in Hartford Superior Court. The officials accuse Kalshi of running an unlicensed sports betting operation and breaching the Connecticut Unfair Trade Practices Act.
Kalshi has already transferred the case to federal court, while its separate appeal regarding whether federal law overrides Connecticut's regulatory efforts on its sports contracts is still pending in the Second Circuit.
Connecticut is pursuing both temporary and permanent injunctions to prevent Kalshi from continuing its unlicensed sports wagering activities. Additionally, the state is seeking restitution, civil penalties, and disgorgement of profits.
The state aims to recover all revenue that Kalshi has made through what the lawsuit describes as “its unlawful operation.” Alternatively, Connecticut seeks the taxes, fees, and contributions that Kalshi would have been obligated to pay had it operated as a licensed sportsbook.
The complaint states that Kalshi has been offering unlicensed sports wagering in Connecticut since January 2025, asserting that the operator has not adhered to the regulations imposed on licensed sportsbooks.
Other allegations include that Kalshi allows users aged 18 to 20 to trade sports contracts, despite the state's legal betting age of 21, and that the platform has targeted younger audiences through paid influencers and college ambassador initiatives. Furthermore, Connecticut claims that Kalshi lacks essential responsible gaming tools and protections that licensed operators must provide, such as self-exclusion options.
The state also contends that Kalshi does not fulfill the financial auditing, account security, and integrity monitoring standards required of licensed sportsbooks.
Utilizing consumer protection laws, Connecticut is challenging how Kalshi presents its products, arguing that the company has misrepresented sports contracts as investments and incorrectly implied their legality across the nation.
“Sports event contracts are no different than sports betting and are not magically shielded by federal law from Connecticut’s commonsense consumer protection laws,” stated Tong.
The legal dispute began in December 2025 when the DCP issued a cease-and-desist order to Kalshi and other prediction markets for offering unlicensed sports wagering.
In response, Kalshi filed a lawsuit against Connecticut officials in federal court, claiming its event contracts are governed by the Commodity Exchange Act and fall under exclusive federal jurisdiction.
Earlier this month, U.S. District Judge Vernon D. Oliver denied Kalshi’s request for a preliminary injunction. Connecticut has referenced this ruling in its latest complaint, highlighting Oliver’s conclusion that Kalshi’s contracts are fundamentally sports wagers.
Kalshi's request for an injunction pending appeal was also denied by Oliver.
Kalshi subsequently approached the Second Circuit for a temporary injunction while awaiting appeal. U.S. Circuit Judge Sarah A. L. Merriam denied that request as a three-judge panel reviews its broader motion for an injunction pending appeal.
These rulings have allowed Connecticut to proceed with enforcement actions while Kalshi's appeal is ongoing.
Initially, Connecticut sought an ex parte temporary injunction in state court that could have swiftly blocked Kalshi’s sports contracts. However, the court denied immediate relief and set a hearing for September 17.