Connecticut Moves to Block Kalshi Sports Markets With New Lawsuit

By jili tutorial · August 31, 2026

Connecticut Files New Lawsuit to Block Kalshi’s Sports Markets

Connecticut has taken legal action again, filing a new lawsuit against Kalshi in an effort to stop the platform from offering sports-event contracts. The state argues that these contracts amount to illegal sports betting.

In a press release, Attorney General William Tong stated, “Sports event contracts are no different than sports betting and are not magically shielded by federal law from Connecticut’s commonsense consumer protection laws.” Tong filed the lawsuit in state court, but Kalshi quickly moved the case to federal court.

The company had previously filed its own lawsuit against Connecticut authorities in November last year, following a cease-and-desist letter from the state.

Kalshi’s Legal Strategy Faces Growing Setbacks

Moving cases to federal court has been a common tactic for Kalshi in its legal battles. While this approach initially worked, the company is now losing most cases in both state and federal courts. Out of 21 rulings issued so far, 17 have gone against Kalshi.

A federal judge recently ruled against Kalshi in Connecticut, denying the company an injunction earlier this month. Judge Vernon Oliver rejected Kalshi’s argument that its sports contracts qualify as swaps under the Commodity Exchange Act (CEA). Kalshi has appealed the ruling to the Second Circuit.

The Commodity Futures Trading Commission (CFTC) backed Kalshi with its own lawsuit against the state in April. That case remains ongoing, with no judgments issued yet.

The new lawsuit cites Judge Oliver’s ruling as evidence that Kalshi’s sports-event contracts lack federal protection. It also notes that judges in Maryland, Nevada, Massachusetts, Washington, Michigan, New York, Ohio, Arizona, and Utah have reached similar conclusions. Connecticut is now seeking injunctive relief “to restrain Kalshi’s illegal offering, advertising, or making available” its sports markets in the state. If granted, Connecticut could join Michigan and Nevada in blocking Kalshi.

Lawsuit Alleges Kalshi Fails to Offer Consumer Protections

Attorney General Tong emphasized that Connecticut’s sports gambling laws are designed to protect consumers—a standard Kalshi is not meeting.

“These laws exist for a reason—to protect minors, to prevent problem gambling, to ensure your money is safe and your personal information is protected. None of that is happening now on Kalshi, and we’re suing to put a stop to it,” said Tong.

The lawsuit lists several examples of Kalshi’s alleged failures to protect users:

Allowing 18-year-olds to gamble on the platform
Not offering the same problem gambling prevention tools as regulated sportsbooks
Failing to make its finances available to independent auditors
Offering markets on Connecticut college sports, which violates state laws
Misrepresenting its product as a financial investment rather than gambling

On the last point, the lawsuit references instances where Kalshi has advertised its product as gambling. It highlights an Instagram ad in which Kalshi claims to be “The First Nationwide Legal Sports Betting Platform.”

Licensed Sportsbooks Also Face Scrutiny

While licensed sportsbooks have not always complied with Connecticut’s regulations, the state’s regulators can impose penalties when violations occur. For example, the Connecticut Department of Consumer Protection launched an investigation into DraftKings’ marketing practices, leading the company to return $3 million to 7,000 Connecticut consumers last year.

Kalshi Ramps Up Partnerships With $1 Billion in New Funding

Despite negative court rulings, Kalshi’s growth has not slowed. The lawsuit notes that the platform’s trading reached $178 billion for the year ending in April—a 32x increase from the previous year. Since April, trading has already reached $138 billion, with $114.7 billion of that volume coming from sports, accounting for 83% of total activity.

The company has also received an additional $1.1 billion in funding, as revealed in a new SEC filing on Tuesday. Part of this money is being invested in new ad campaigns, lobbying efforts, and sponsorship deals with major sports organizations.

This week, Kalshi announced deals with five MLB teams, including the Boston Red Sox. Although Connecticut has no MLB team, many baseball fans in the state travel to Boston, where Kalshi branding will appear at Fenway Park.

Like Connecticut, Massachusetts is also locked in a legal battle with Kalshi. A judge there ruled that the platform’s sports markets are unlicensed sports betting and ordered it to block access in the state. Kalshi has appealed to the Massachusetts Supreme Court, where the case remains ongoing.