Kalshi Secures Temporary Stay Against Connecticut Gambling Regulation

A recent judgment from a federal judge has granted Kalshi, a prediction markets platform, a temporary reprieve from enforcement following allegations from Connecticut regulators that the company was operating unlicensed online gambling.

Key Takeaways:

A federal judge has temporarily prohibited Connecticut from enforcing its gambling order against Kalshi.
Kalshi maintains that its event contracts are regulated solely by the Commodity Futures Trading Commission (CFTC), not by state gambling regulations.
This legal dispute in Connecticut is among several state-level conflicts Kalshi faces as it expands its operations nationwide.

This ruling halts the Connecticut state’s actions as the legal debate surrounding Kalshi's status is set to proceed into early 2026.

On December 2, the Connecticut Department of Consumer Protection (DCP) issued cease-and-desist orders to Kalshi, along with Robinhood and Crypto.com, claiming these companies were offering unlicensed sports betting through "online sports event contracts."

Kalshi Wins Temporary Pause Against Connecticut Gambling Order

Court Blocks Connecticut's Actions as Kalshi Claims Federal Jurisdiction

Shortly after the cease-and-desist orders, Kalshi took legal action against the DCP, asserting that its event contracts are clearly governed by federal derivatives law, which places authority in the hands of the CFTC rather than individual states.

On Monday, Judge Vernon Oliver ruled that the DCP must refrain from further actions while the court examines Kalshi's request for temporary relief. According to the court's timeline, the DCP must reply by January 9, Kalshi will provide supplementary arguments by January 30, and oral arguments are anticipated to take place in mid-February.

Kalshi, which is recognized by the CFTC as a federally regulated contract market, started offering event-based contracts nationwide this year, covering markets related to sports, weather, and political developments.

However, the company’s expansion has prompted a series of challenges from state regulators. Numerous states contend that Kalshi’s contracts function as sports bets and thus fall under their gambling legislation.

Kalshi defends its products as federally regulated financial instruments rather than wagers, suggesting that state interventions breach the Commodity Exchange Act.

Connecticut represents the latest in a series of regulatory confrontations for Kalshi. In October, the firm filed a lawsuit against the New York State Gaming Commission after it issued a similar cease-and-desist directive.

In September, Massachusetts’ attorney general also brought the company to court, and Kalshi has initiated legal actions this year against regulators in New Jersey, Nevada, Maryland, and Ohio, alleging each has overstepped their regulatory bounds.

Major Partnerships and Funding for Kalshi

Recently, Kalshi achieved a significant milestone by forming a partnership with CNN, designating it as the network’s official prediction markets collaborator while successfully concluding a $1 billion funding round, resulting in an $11 billion company valuation.

Under this collaboration, Kalshi’s real-time market insights will be utilized in CNN’s newsroom to enhance coverage of political, economic, and major cultural developments.

This funding surge follows a notable uptick in activity among prediction platforms. As per Token Terminal data cited by the company, Kalshi experienced record trading volumes of $4.54 billion in November, surpassing October's $4.49 billion.

Currently, Kalshi reports that its weekly trading volumes have exceeded $1 billion, indicating an immense growth rate of over 1,000% since 2024.

Its primary competitor, Polymarket, also experienced a robust November, achieving a monthly trading volume of $3.76 billion after exceeding $3 billion in October.

In addition, Mike Novogratz’s Galaxy Digital is engaged in discussions with both Polymarket and Kalshi regarding liquidity provision, as interest in on-chain betting related to real-world events continues to rise among retail traders and Wall Street entities.