Connecticut state officials have told Kalshi and several other companies to stop offering sports-related betting contracts in the state. The Department of Consumer Protection, or DCP, said none of these companies holds a Connecticut sports wagering license. Officials also said their products break other state laws, including rules that prevent people under 21 from placing bets.

DCP Commissioner Bryan T. Cafferelli said that only approved operators may offer sports betting in Connecticut. He warned that unlicensed platforms put users at financial and personal risk. These rules are in place to protect consumers and make sure betting is fair and safe for everyone.

Only Three Licensed Operators in Connecticut

Currently, Connecticut allows only three companies to provide sports betting. DraftKings works with Foxwoods, FanDuel partners with Mohegan Sun, and Fanatics operates through the Connecticut Lottery. These licensed operators must follow strict rules. They have to monitor all betting activity to prevent cheating, maintain technical and security standards, and make sure customers are treated fairly while protecting their personal information.

DCP Gaming Director Kris Gilman said that prediction market platforms operate outside the state’s regulations. He added that users may not realize that wagers on these platforms do not protect their money or personal information. Gilman also emphasized that a prediction market wager is not an investment, and there is a high risk of losing money.

Concerns About Fairness and Safety

The DCP said the platforms fail to meet Connecticut’s standards and requirements. They do not follow technical rules, have no proper integrity controls, and use house rules that regulators have not reviewed or approved. Officials also warned that insiders could influence outcomes or trade on results that are already known, creating a system that is unfair and risky for the public.

The cease-and-desist notices also mentioned advertising to people on the state’s Voluntary Self-Exclusion List, targeting college campuses, and allowing under-21s to place wagers. The DCP ordered the companies to return any funds held from Connecticut customers. It also warned that failing to comply could lead to fines or even criminal charges under state gaming laws.

Kalshi Challenges the Order in Court

Soon after receiving the directive, Kalshi filed a lawsuit in federal court against the DCP. The company argued that state rules on sports-related event contracts are overruled by federal law under the Commodity Exchange Act. Kalshi also said it will ask the court for an emergency temporary restraining order and a preliminary injunction.

The case could have a significant impact on how prediction markets are regulated in Connecticut and other states. It highlights the ongoing legal debate over whether these platforms are a form of gambling or a legitimate trading product.