Connecticut Attorney General William Tong announced Thursday that his state is suing Kalshi for “illegal unlicensed sports betting” after a federal judge denied Kalshi’s requests to stop enforcement.
The suit in Hartford Superior Court seeks an injunction to prevent Kalshi from offering sports event contracts in the Nutmeg State, which legalized online sports betting in 2021.
“Sports event contracts are no different than sports betting and are not magically shielded by federal law from Connecticut’s commonsense consumer protection laws. 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,” Tong said in a statement.
Kalshi fight in Connecticut looks familiar
The sequence of events leading to Connecticut’s suit closely mirrors that of neighboring New York, where Kalshi and AG Letitia James remain locked in an unprecedented battle involving courts and the Commodity Futures Trading Commission (CFTC). Both states issued cease-and-desist orders to Kalshi months ago, followed by the operator receiving temporary reprieves before losing multiple tries to prevent enforcement.
Connecticut also followed New York’s lead in seeking major financial penalties against Kalshi, including:
- Requiring either disgorgement of all revenue acquired in Connecticut or a lesser penalty of disgorging “the amount of all taxes, fees, and contributions which Kalshi, were it a licensee, would have been obligated to remit”
- Civil penalties for each willful violation of state law
- Order to pay restitution
“These prediction markets put Connecticut consumers, young people, our student athletes, and those suffering from gambling addiction at serious risk. They have made it clear their goal is profits over people, and that’s why we are holding them accountable,” said Gov. Ned Lamont.
“When we legalized sports wagering in 2021, the goal was to create a safe, responsibly regulated market for Connecticut consumers, not to open a free-for-all on sports betting. We did this in coordination with our tribal partners, recognizing the importance of our government-to-government relationship and acknowledging tribal sovereignty in gaming operations, something we have honored for more than three decades.”
District Court judge: ‘they are sports wagers’
U.S. District Court Judge Vernon Oliver ruled Aug. 7 against Kalshi and Coinbase’s motions to stop Connecticut from taking legal action to end their operations in the state.
Oliver wrote in his decision that “Kalshi characterizes its sports-related event contracts in various ways, but at bottom, they are sports wagers.”
“The Court declines to conclude either that these sports wagers are properly categorized as swaps and fall under the CFTC’s authority, or that Congress clearly displaced Connecticut’s traditional authority to regulate sports wagering and vested that authority in the CFTC, an agency that has not historically regulated sports wagering and has not exercised meaningful oversight over Kalshi’s sports event contracts,” Oliver continued.
