Kalshi, a platform that lets users trade on the outcomes of future events, has won a temporary pause on enforcement actions from Connecticut regulators. The move marks a new stage in an expanding legal fight over whether event-based trading should be treated as regulated derivatives or illegal online gambling.
In an order issued Monday, U.S. District Judge Vernon Oliver instructed Connecticut’s Department of Consumer Protection to hold off on any enforcement while the court considers Kalshi’s request for preliminary relief. The decision follows cease-and-desist notices that the state sent on December 2 to Kalshi, Robinhood, and Crypto.com, accusing the companies of offering unlicensed sports-related wagering.
Kalshi responded the next day by suing the state. In its filing, the company argued that its markets are federally regulated derivatives overseen by the Commodity Futures Trading Commission. Since the CFTC approved Kalshi as a designated contract market in 2020, the company says state gambling laws don’t apply and that Connecticut is reaching beyond its authority. Kalshi also asked the court for a temporary restraining order to prevent any disruption to its operations.
“Connecticut’s attempt to regulate Kalshi intrudes upon the federal regulatory framework that Congress established for regulating derivatives on designated exchanges,” the company said in the filing.
Judge Oliver’s order gives Kalshi breathing room while the case moves through the courts. Connecticut must respond to the complaint by January 9, 2026, and Kalshi will have until January 30 to file additional arguments. Oral arguments are expected in mid-February.
The Connecticut dispute is the latest in a series of challenges for Kalshi. The company has faced similar scrutiny in Arizona, Illinois, Montana, and Ohio this year as more states weigh how to classify prediction markets.
