A federal judge has handed prediction markets platform Kalshi a temporary shield from enforcement after Connecticut regulators accused the company of running unlicensed online gambling.
Key Takeaways:
- A federal judge temporarily blocked Connecticut from enforcing its gambling order against Kalshi.
- Kalshi argues its event contracts fall under the CFTC’s exclusive jurisdiction, not state gambling laws.
- The Connecticut dispute is one of several state-level battles Kalshi is fighting as regulators challenge its nationwide expansion.
The ruling pauses state action as the legal fight over Kalshi’s status moves into early 2026.
Connecticut’s Department of Consumer Protection (DCP) issued cease-and-desist notices on Dec. 2 to Kalshi, Robinhood, and Crypto.com, alleging they were offering unlicensed sports wagering through “online sports event contracts.”
Judge Halts Connecticut Action as Kalshi Claims Federal Oversight
A day later, Kalshi sued the agency, arguing that its event contracts fall squarely under federal derivatives law and that the Commodity Futures Trading Commission (CFTC), not individual states, has “exclusive jurisdiction” over its platform.
On Monday, Judge Vernon Oliver ordered the DCP to refrain from taking action while the court reviews Kalshi’s request for temporary relief.
Under the schedule set by the court, the DCP must respond by Jan. 9, Kalshi will submit additional arguments by Jan. 30, and oral arguments are expected in mid-February.
Kalshi, designated by the CFTC as a federally regulated contract market, began offering event-based contracts nationwide earlier this year, including markets tied to sports, weather, and political outcomes.
However, the platform’s expansion has triggered a wave of state-level challenges. Regulators in several states argue that Kalshi’s contracts resemble sports bets and fall under gambling laws.
Kalshi says its products are federally regulated financial instruments, not wagers, and that state crackdowns violate the Commodity Exchange Act.
Connecticut is the latest in a string of regulatory battles. In October, Kalshi sued the New York State Gaming Commission after it issued a similar cease-and-desist order.
Massachusetts’ attorney general took the company to court in September, and Kalshi has filed suits this year against regulators in New Jersey, Nevada, Maryland, and Ohio, accusing each of overstepping their authority.
Kalshi Partners with CNN After $1B Funding Round
As reported, Kalshi has secured a major media breakthrough after signing a partnership with CNN, making the company the network’s official prediction markets partner while closing a $1 billion funding round at an $11 billion valuation.
Under the agreement, Kalshi’s real-time market data will be used inside CNN’s newsroom to support reporting on politics, economics, and major cultural events.
The funding follows a surge in activity across prediction platforms. According to Token Terminal data cited by the company, Kalshi posted record trading volume of $4.54 billion in November, beating October’s $4.49 billion.
Kalshi said weekly volumes are now exceeding $1 billion, representing growth of more than 1,000% since 2024.
Its closest competitor, Polymarket, also recorded a strong November, hitting a monthly total of $3.76 billion after crossing $3 billion in October.
Meanwhile, Mike Novogratz’s Galaxy Digital is in talks with Polymarket and Kalshi about becoming a liquidity provider, as on-chain betting on real-world events draws more attention from both retail traders and Wall Street.
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