Connecticut sues Kalshi to block alleged unlicensed sports gambling
The state of Connecticut sued Kalshi on Thursday to block alleged unlicensed sports gambling offered by the online prediction platform, the Office of the Attorney General said.
According to Attorney General William Tong, Kalshi allows customers to bet on a variety of real-world events, but its sports-related wagers constitute a violation of Connecticut's consumer protection laws prohibiting sports gambling.
In the statement, the Office of the Attorney General said the platform "offers sports event contracts that resemble sports wagers" including how many wins a team will have in a season, the number of points scored in a game, the points spread and more.
"This is gambling," the statement further said.
The lawsuit marks the latest legal action taken by state officials to regulate online prediction markets like Kalshi. A federal court last month temporarily blocked a Minnesota ban on prediction markets, siding with defendants who said they were subject to federal and not state oversight.
Days later, New York also sued Kalshi, alleging its prediction market is illegal, unlicensed gambling, in large part because the states says outcomes depend more on chance than skill.
“Sports event contracts are no different than sports betting and are not magically shielded by federal law from Connecticut’s commonsense consumer protection laws," Tong said in the statement.
In response to a request for comment, Kalshi directed ABC News to a post on X by Jovy Dedaj, the head of litigation for Kalshi, which called for federal oversight of prediction markets while criticizing the Connecticut lawsuit for singling out Kalshi while allegedly allowing other prediction markets to operate in the state.
"This is 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. This unequal treatment is exactly why federal oversight is necessary," Dedaj said in the post.
In December, a Connecticut consumer protection agency ordered Kalshi and two other platforms to cease and desist conducting unlicensed online gambling, specifically sports wagering, the Office of the Attorney General said.
Kalshi responded by suing Connecticut in an effort to pause the legal action, claiming that its prediction contracts are financial instruments regulated exclusively by the Commodity Futures Trade Commission, a federal agency.
Earlier this month, a federal judge denied Kalshi’s motion, the Office of the Attorney General said. Kalshi has appealed the ruling.
On its website, Kalshi states that it is "regulated as a Designated Contract Market (DCM), which is a financial exchange designated to trade futures, swaps, and or options on commodities" and as such is subject to federal oversight.
In a statement after last month's temporary reprieve from Minnesota's proposed state ban, Kalshi further argued that the company's wagers fall under federal oversight.
"Today’s decision makes it clear: States cannot ban things that they don't have jurisdiction over. It runs directly against what Congress intended when it gave explicit, exclusive jurisdiction over financial markets to federal regulators, and it hurts the traders and everyday citizens who rely on these markets," Elisabeth Diana, a spokesperson for Kalshi, told ABC News at the time.
