Connecticut's Attorney General William Tong revealed on Thursday that the state is suing Kalshi for engaging in "illegal unlicensed sports betting," following a federal judge's denial of Kalshi’s requests to halt legal enforcement against them.
The lawsuit, filed in Hartford Superior Court, aims to block Kalshi from offering sports event contracts within Connecticut, where online sports betting was legalized 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 stated.
The situation in Connecticut echoes that of neighboring New York, where Kalshi is currently embroiled in an unprecedented legal battle with Attorney General Letitia James, involving both state courts and the Commodity Futures Trading Commission (CFTC). Previously, both Connecticut and New York issued cease-and-desist orders to Kalshi, which initially received temporary relief before failing in multiple attempts to evade enforcement.
In its lawsuit, Connecticut also aims to impose substantial financial penalties on Kalshi. These penalties include: disgorgement of all revenue generated in the state or a lesser charge reflecting what Kalshi would owe in taxes, fees, and contributions as a licensed operator; civil fines for each deliberate breach of state law; and restitution payments.
Governor Ned Lamont expressed concern over the potential risks posed by prediction markets to residents, particularly young people and those struggling with gambling addictions. "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," Lamont asserted.
Lamont emphasized that the legalization of sports wagering in 2021 aimed to create a safe and well-regulated market. He noted the importance of the state’s relationship with its tribal partners in regard to gaming operations, which have been acknowledged for over thirty years.
In an earlier ruling, U.S. District Court Judge Vernon Oliver rejected motions from Kalshi and Coinbase aimed at stopping Connecticut’s legal actions. Judge Oliver clarified that while Kalshi has described its contracts in various terms, they fundamentally qualify as sports wagers. He further noted that the court does not categorize these as falls under CFTC jurisdiction and questioned whether Congress intended to transfer authority over sports wagering regulation away from Connecticut.
