Connecticut regulator reveals it’s been investigating Kalshi since 2024

The Connecticut Department of Consumer Protection’s (DCP) gaming division has become the latest regulator to announce it is taking a closer look at Kalshi’s prediction markets offering.  

Given Kalshi is regulated at federal level by the Commodity Futures Trading Commission (CFTC), the New York-based firm argues it does not have to adhere to the rules of state-level regulators such as the DCP’s gaming division.   

The regulator has explained to EGR that it opened its investigation into Kalshi “in the fall” of 2024, but did not disclose when the probe would conclude, nor what action could be taken. 

The DCP also did not outline its specific concerns around Kalshi’s offering, but did reveal that it is suspected of operating in violation of state law.  

Due to the nature of the product, which allows anyone over the age of 18 across all 50 US states to trade contracts based on the outcome of sports events, including sports fixtures, Kalshi has drawn the ire of several state gaming regulators.  

State-level pushback

Since the start of March, regulators in both Nevada and New Jersey have issued cease-and-desist orders to Kalshi.  

Robinhood, a retail brokerage firm that also offers sports event contracts via a prediction markets hub powered by Kalshi, has also come under scrutiny from the Massachusetts secretary of state.  

In the case of Kalshi, the company has responded to being under the regulatory microscope by filing lawsuits against both the New Jersey Division of Gaming Enforcement (DGE) and the Nevada Gaming Control Board (NGCB).  

However, Kalshi’s scheduled court hearing against the DGE, initially scheduled for April 2, has been adjourned at the request of both parties.  

Kalshi and the DGE agreed that a temporary restraining order (TRO), which the prediction markets platform previously filed for as it would prevent the regulator from halting event contracts, was no longer necessary. 

In turn, a new briefing schedule has been proposed, with the DGE expected to detail its opposition brief to the District Court of New Jersey on April 18, before Kalshi files its reply five days later.   

Kalshi remains in pursuit of a preliminary injunction, which would prevent the DGE from enforcing any law that is used to regulate its sports event contract offering.   

The DGE has extended its cease-and-desist deadline until April 30 and both parties have outlined their belief that the new timeline will provide the court with enough time to “resolve plaintiff’s preliminary injunction motion” by the new deadline.   

The dispute began on March 27, when the DGE submitted its cease-and-desist order to both Kalshi and Robinhood.

New Jersey’s regulator called for all contracts traded by residents of the state to be voided, and it accused Kalshi of violating the state’s constitution.   

More recently, the Ohio Casino Control Commission (OCCC) became the latest regulator to issue a cease-and-desist letters to Kalshi and Robinhood. It was also the first authority to directly address Crypto.com, another platform offering sports event contracts.

Finally, Nevada Representative Dina Titus has publicly called on the CFTC to suspend all sports event contracts in a letter sent to the derivatives regulator.

Her plea to the CFTC, which has received the backing of the American Gaming Association (AGA), has also requested that the federal authority “alter the terms and conditions” of the contracts so that those physically present in Nevada are blocked from engaging.

“I urge the Commission to exercise its authority to stay the listing of such contracts nationwide to ensure this unlawful activity does not persist as additional states, like New Jersey and Ohio have, determine if these contracts violate state law, and as a legal process unfolds in states, courts, and agencies,” Titus wrote.