The Connecticut Department of Consumer Protection (DCP) is investigating prediction markets operator Kalshi.
The DCP’s Director of Communications Kaitlyn Krasselt told SBC Americas that the department’s Gaming Division has an open investigation into prediction market exchange Kalshi, “which is suspected of operating in violation of Connecticut law.”
DCP declined to provide further details into the matter.
Connecticut is the fourth state to have taken some form of action against Kalshi for offering trading on event contracts. Gaming regulators in Nevada, New Jersey and Ohio have sent cease-and-desist letters to the operator.
It does not appear at this stage that the Connecticut DCP has taken that particular step.
Kalshi has been offering sports futures markets in all 50 states since before the Super Bowl. In February, it wrote to the Commodity Futures Trading Commission (CFTC) to inform the commission that it would be self-certifying markets akin to both single-event and prop betting. It has been offering “to win” markets on individual games throughout March Madness.
State gaming regulators, among other observers, have argued in some cases that sports event contracts, which Kalshi says fall under the federal purview of the CFTC, are tantamount to unlicensed sports betting.
Other prediction market operators also scrutinized
Kalshi has been the most common name in the headlines, but other prediction markets operators are also being hounded by states.
The New Jersey Division of Gaming Enforcement (DGE) and the Ohio Casino Control Commission (OCCC) have also sent a C&D to Kalshi’s partner Robinhood, which is offering a suite of sports event contracts powered by Kalshi. Robinhood has also been subpoenaed in Massachusetts by Secretary of State Bill Galvin.
On Monday, the OCCC announced it also sent a C&D to Crypto.com, another prediction market operator that offers sports contracts.
Kalshi’s New Jersey hearing adjourned
As the situation continues to evolve quickly, Kalshi is suing the New Jersey DGE and the Nevada Gaming Control Board (NGCB) in federal court, alleging they are infringing upon the company’s federal right to offer event contracts under the CFTC’s “exclusive authority” to regulated derivatives contracts.
In New Jersey, after Kalshi filed for a temporary restraining order and preliminary injunction, a hearing was scheduled for Wednesday, April 2. However, as reported by attorney Daniel Wallach, the hearing was adjourned after the parties agreed to forego the temporary restraining order concern and proceed directly to the preliminary injunction motion.
DGE has until April 18 to reply to the suit, then Kalshi will have until April 23 to provide a response to DGE’s argument.
