Connecticut court denies Kalshi's appeal to halt gambling enforcement
Judge rules prediction markets fall under gambling regulations during appeal process.
1Kalshi's emergency motion rejected
A Connecticut federal court denied prediction market operator Kalshi's request for an injunction against gambling law enforcement during its appeal on August 15. Judge Vernon D. Oliver also declined to grant temporary administrative relief while Kalshi seeks an injunction from the Second Circuit. The decision affirmed Kalshi's sports event contracts don't qualify as 'swaps' under the Commodity Exchange Act, placing them outside CFTC's exclusive jurisdiction.
2CFTC's authority claim overturned
The court found the Commodity Futures Trading Commission's (CFTC) 'market emergency' declaration legally unfounded. Judge Oliver emphasized CFTC lacks authority to issue orders conflicting with court decisions. Guidance issued by CFTC on August 11 following New York AG's lawsuit against Kalshi didn't alter this ruling. Oliver maintained the contracts fall outside CFTC's exclusive regulatory scope.
3Connecticut's regulatory power upheld
The ruling confirmed federal laws don't preempt Connecticut's historical authority to regulate sports betting. The state had sent Kalshi a cease-and-desist letter in December 2025. Consumer Protection Commissioner Bryan T. Cafferelli argued only licensed entities can offer sports wagering, noting Kalshi lacked licensure and offered bets to under-21 individuals.
4Higher legal standard for appeals
Judge Oliver noted Kalshi needed stronger evidence of likely success for an injunction during appeal than for preliminary relief. He found the company failed to meet this higher threshold. Claims that the Second Circuit might rule differently were dismissed, as mere appeal possibility doesn't warrant extraordinary legal measures.
5Kalshi's risk assessment deemed insufficient
The court found Kalshi's arguments about potential civil liability and reputational damage from Connecticut enforcement unpersuasive. Judge Oliver called risks of CFTC intervention speculative. Potential financial losses from suspending Connecticut operations also didn't justify injunctive relief.
6Sports contracts drive company revenue
After expanding into sports prediction contracts in January 2025, these products constituted 80-90% of Kalshi's listed contracts and revenue by February 2026 hearings. The $11 billion company relies heavily on sports betting. Connecticut's intervention threatens this core business model.
7Prediction market bill dies in committee
Governor Ned Lamont's Bill 5038, which proposed safeguards for prediction markets and mandated a statewide study, failed in committee. This development suggests continued regulatory uncertainty for the industry. Conflicts between federal and state regulators over platforms like Kalshi will likely persist.
8Fintech-gambling regulatory boundaries
The case sets a precedent for conflicts between fintech innovations and traditional gambling regulations. Uncertainty over whether prediction markets qualify as financial instruments or gambling products hinders industry growth. Connecticut's aggressive stance may influence other states. Kalshi's appeal outcome will shape the future of prediction markets in the US.
Original article: ReadWrite — Connecticut mahkemesi Kalshi'nin bahis yasağı itirazını reddetti