Connecticut sued the prediction market Kalshi on August 26, 2026, alleging its sports event contracts are unlicensed sports wagering and asking a state court to stop them, return money to residents and impose civil penalties. The court refused the state's request for an immediate ban that same day, Kalshi disputes Connecticut's authority over it entirely, and there is no class action and nothing for a user to claim.
Allegations Only · No Settlement Yet
This article describes a government enforcement complaint and related court filings. The statements attributed to Connecticut below are unproven allegations. Kalshi disputes them, has not been found liable, and no court has decided the merits. There is no class, no settlement and nothing to claim. This page is informational and is not legal advice.
What Connecticut Filed
On August 26, 2026, the State of Connecticut sued Kalshi in Connecticut Superior Court, asking the court to stop the platform from offering sports event contracts to state residents. Attorney General William Tong announced the case, which the state says was brought in coordination with its tribal gaming partners — a relationship Connecticut has structured its legal gambling market around for more than three decades.The claims are brought under the Connecticut Unfair Trade Practices Act. Reporting on the complaint describes three counts: illegal wagering, underage gambling and deception. The relief the state seeks is broad — temporary and permanent injunctions, restitution, civil penalties, and the surrender of the revenue and profits it says Kalshi earned from Connecticut residents through unlicensed activity.
The dispute did not start here. In December 2025, Connecticut's Department of Consumer Protection issued cease-and-desist orders to three platforms — Kalshi, Robinhood and Crypto.com — directing them to stop offering sports event contracts in the state and to let Connecticut residents withdraw funds held on their platforms. Kalshi's answer was to sue the department in federal court. This state-court case is Connecticut's move in the other direction.
The Immediate Ban the Court Refused
This is the part most coverage rushed past, and it changes what the filing actually accomplished so far.Alongside the complaint, Connecticut asked for an ex parte temporary restraining order — an order banning the contracts immediately, entered without giving Kalshi the chance to be heard first. The court denied that request the same day the case was filed.
That denial is not a ruling that Connecticut is wrong. Ex parte relief is extraordinary by design, and courts routinely decline to shut down an ongoing business without hearing from it, particularly where the underlying legal question is contested and already on appeal elsewhere. The state's broader request for an injunction is still live and will be decided with both sides participating.
The practical upshot: as of publication, a court has not ordered Kalshi to stop offering sports event contracts in Connecticut. Headlines saying the state "blocked" or "shut down" Kalshi are ahead of the record.
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What the Complaint Alleges
Everything in this section is Connecticut's contention, drawn from the complaint and the state's announcement of it. None of it has been tested, and Kalshi disputes the state's position.The core allegation is structural: that Kalshi's sports event contracts — yes-or-no propositions on whether a team or player wins, or on how many games a team wins in a season — function as sports wagers, and that offering them without a Connecticut licence is unlicensed gambling regardless of what the product is called.
Layered on top are allegations about who was reached and how:
• Age. Connecticut sets 21 as the minimum age for licensed sports betting. Kalshi permits trading at 18, which the state says puts a category of young adults into sports wagering that its licensing regime deliberately excludes.
• College marketing. The complaint alleges Kalshi promoted itself to younger audiences through paid online promoters and a college ambassador program, including at Yale, and offered contracts on games played by Connecticut schools such as UConn and Yale — markets the state says its licensed operators are not permitted to post.
• Minors in promotion. The complaint further alleges that Kalshi paid minors to make promotional TikTok content and at one point used a 15-year-old video game streamer as an affiliate.
That last allegation is the most serious in the filing and also the least tested. It appears in the state's complaint; Kalshi has not conceded it, no court has evaluated it, and it should be read as a claim a party has made rather than an established fact.
Kalshi's Position
Kalshi's defense does not really engage the state's factual allegations, because its argument is that Connecticut has no business making them.The company holds that it is a federally regulated exchange under the Commodity Futures Trading Commission, that its contracts are financial instruments rather than bets, and that federal law occupies the field — leaving state gaming regulators without authority over what it lists.
Responding to this suit, Kalshi pointed to a public statement from its head of litigation, Jovy Dedaj, who called the case "the latest in a line of arbitrary and inconsistent enforcement by the states, which shows this has nothing to do with consumer protection. If it did, the states would be seeking the same relief across the board." The statement argued that this "unequal treatment is exactly why federal oversight is necessary."
It is worth taking the point seriously rather than dismissing it: Connecticut's December 2025 orders named Robinhood and Crypto.com alongside Kalshi, and the state's August lawsuit targets Kalshi alone. Whether that reflects selective enforcement or simply differing responses to the original orders is not something the public record settles.
The Federal Case Kalshi Brought — and Lost
Connecticut's lawsuit lands three weeks after Kalshi's own case against the state went badly.After the December 2025 cease-and-desist, KalshiEX LLC sued Connecticut's Department of Consumer Protection and its commissioner in the U.S. District Court for the District of Connecticut, seeking to block enforcement on preemption grounds. On August 10, 2026, Judge Vernon D. Oliver denied the preliminary injunction.
Two holdings matter. First, the court found Kalshi had not shown its sports event contracts are likely "swaps" under the Commodity Exchange Act: a swap turns on whether an underlying event occurs, fails to occur, or occurs to a particular extent, while these contracts turn on the outcome of a game or on discrete in-game occurrences. Second, the court held that even if they were swaps, the Act would not preempt Connecticut's traditional authority to regulate sports wagering. Coverage of the ruling noted the judge drew a comparison between parlay-style contracts and casino gaming.
The court also rejected an unusual argument: that a CFTC "market emergency" order should shield Kalshi from state enforcement. In the judge's reasoning, nothing in the Commodity Exchange Act takes statutory interpretation away from the courts, and the CFTC as an administrative agency cannot issue an order that overrides a court's reading of the statute.
Two qualifications belong here. A preliminary injunction ruling measures likelihood of success, not final merits — the case is not over. And Kalshi has appealed to the Second Circuit, which declined to grant immediate relief while the appeal proceeds. A subsequent emergency motion for an injunction pending appeal was also denied.
For the mirror image of this fight, see our coverage of Kalshi suing Illinois over its sports-betting law — the same preemption theory, with Kalshi as plaintiff.
Is There Anything Here to Claim?
No — and the distinction is worth being precise about, because Kalshi has attracted several very different kinds of case and only some of them are about getting money back to users.This case is enforcement. Connecticut sued as a regulator. There is no class, no settlement, no administrator, no fund, no claim form and no deadline. The state is seeking restitution and the surrender of Kalshi's Connecticut revenue, so money is theoretically in play — but that money would be recovered by the state, and nothing in the public record describes a mechanism for distributing it to individual users. Treat any suggestion that residents can sign up for a share as unfounded.
Private class actions are the other track. Users have brought their own suits under old state gambling-loss recovery statutes, which in some states let a losing bettor — or sometimes anyone — sue to recover losses from an unlicensed operator. Those are the cases where an individual is the plaintiff and a recovery would run to class members. OCA tracks the Kentucky gambling-loss class action and the Oregon double-loss class action separately. Both remain at the complaint stage with nothing to file.
What Happens Next
• The injunction hearing. The state's request for an injunction against the sports contracts is still pending in Superior Court, now on notice to Kalshi rather than ex parte.• The Second Circuit. Kalshi's appeal of the August 10 ruling is the consequential one. A decision would bind federal courts in Connecticut, New York and Vermont, and would be read closely everywhere else.
• Kalshi's response in state court. Expect a challenge to the state court's authority to reach a CFTC-registered exchange before any argument about the underlying conduct.
• Other states. Kalshi is contesting similar enforcement elsewhere, and the reasoning in the Connecticut ruling — that sports event contracts are not swaps — is available to other courts as persuasive authority.
OCA will update this page as the docket moves. For the wider picture, see our running overview of Kalshi's legal challenges, and the related cases against Robinhood's sports event contracts and DraftKings Predictions.
Frequently Asked Questions
Is there a class action or a claim form for Kalshi users in Connecticut?
Not from this case. Connecticut brought a government enforcement action, not a class action — there is no class, no settlement fund, no administrator, no claim form and no deadline. The state is asking for injunctions, restitution, civil penalties and the surrender of revenue Kalshi earned from Connecticut residents; if any of that is ever ordered, how it would reach individual users is a question the court has not addressed. Separate private class actions filed by users in Kentucky and Oregon are the cases built around recovering individual gambling losses.
Has a court ordered Kalshi to stop offering sports contracts in Connecticut?
No. Connecticut asked for an ex parte temporary restraining order — an immediate ban entered without giving Kalshi a chance to respond — and the court denied that request the same day the suit was filed. The state’s broader request for an injunction is still pending and will be heard with both sides participating. Reporting that describes Connecticut as having blocked Kalshi is ahead of the record.
What did the federal judge already decide?
On August 10, 2026, U.S. District Judge Vernon D. Oliver denied Kalshi’s request for a preliminary injunction against Connecticut’s enforcement. He concluded Kalshi had not shown its sports event contracts are likely swaps under the Commodity Exchange Act, reasoning that they turn on the outcome of a game or on discrete in-game occurrences rather than on whether an underlying event happens, and added that even if they were swaps the Act would not preempt Connecticut’s authority over sports wagering. That is a ruling on Kalshi’s likelihood of success at a preliminary stage, not a final judgment. Kalshi has appealed to the Second Circuit.
What does Kalshi say about it?
Kalshi maintains it is a federally regulated exchange overseen by the Commodity Futures Trading Commission rather than a gambling operator, and it points to that federal registration as the answer to state gaming law. Responding to Connecticut’s suit, its head of litigation said the case is the latest in a line of arbitrary and inconsistent state enforcement, argued it has nothing to do with consumer protection because the state is not seeking the same relief against every prediction market, and said the unequal treatment is why federal oversight is necessary. Kalshi has not been found liable, and its position on preemption remains live on appeal.
Why does the age difference matter in this case?
Connecticut sets 21 as the minimum age for licensed sports betting. Kalshi opens trading to users 18 and older, because it is registered as a derivatives exchange rather than licensed as a sportsbook. The state’s complaint treats that gap as part of the harm, and pairs it with allegations about how the platform was promoted to younger audiences. Kalshi’s answer is that it is not a sportsbook at all, which is the same preemption question the courts are working through.
Does this affect prediction markets outside Connecticut?
Potentially. The federal ruling that sports event contracts are not swaps, and that the Commodity Exchange Act would not preempt state gambling law even if they were, is persuasive reasoning other courts can look to, and the Second Circuit’s answer would bind federal courts across Connecticut, New York and Vermont. Kalshi is contesting similar enforcement in several other states, so the appeal is being watched well beyond this one case.
Sources
• Connecticut Office of the Attorney General — Connecticut Sues Kalshi to Stop Illegal Unlicensed Sports Betting (August 26, 2026)• Connecticut Department of Consumer Protection — Consumer Protection Orders Cease and Desist Conducting Unlicensed Online Gambling (December 2025)
• ABC News — Connecticut sues Kalshi to block alleged unlicensed sports gambling (August 2026)
• CT Mirror — CT sues Kalshi over unlicensed sports betting (August 27, 2026)
• CT News Junkie — Claiming Unlicensed Sports Betting, CT Sues Kalshi (August 27, 2026)
• Hartford Business Journal — CT sues Kalshi, adding third case to ongoing legal fight (August 2026)
• The Block — Connecticut sues Kalshi over sports event contracts in months-long legal feud (August 27, 2026)
• Legal Sports Report — CT Sues Kalshi, Calls Offerings "Illegal, Unlicensed Sports Betting" (August 2026)
• Gambling Insider — CFTC "Market Emergency" Order Fails to Sway CT Judge in Kalshi Case (August 2026)
