State government is suing the prediction market platform to protect minors and prevent problem gambling
The state of Connecticut is suing Kalshi and seeking a court injunction to block the prediction market platform from offering unlicensed sports wagering in the state.
Attorney General William Tong, Department of Consumer Protection (DCP) Commissioner Bryan Cafferelli and Governor Ned Lamont are together taking action against Kalshi’s sports event contract, which they describe as gambling.
Last December, the DCP’s Gaming Division ordered Kalshi and two other sites to cease and desist conducting unlicensed online gambling, specifically sports event contracts.
Kalshi responded by suing the state, seeking a preliminary injunction against enforcement of Connecticut law, arguing that its prediction contracts are “swaps” regulated solely by the federal Commodity Futures Trade Commission (CFTC).
Earlier this month, United States District Judge Vernon Oliver denied Kalshi’s motion. Kalshi has since appealed to the Second Circuit Court of Appeals.
“Sports event contracts are no different than sports betting and are not magically shielded by federal law from Connecticut’s commonsense consumer protection laws,” said Attorney General Tong. “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.”
Governor Lamont commented: “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.
“When we legalized sports wagering in 2021, the goal was to create a safe, responsibly regulated market for Connecticut consumers, not to open a free-for-all on sports betting. We did this in coordination with our tribal partners, recognizing the importance of our government-to-government relationship and acknowledging tribal sovereignty in gaming operations, something we have honored for more than three decades.”
DCP Commissioner Cafferelli added: “Our agency has been tracking the evolution of prediction markets from their inception, with great concern for the potential negative impacts on the public. These markets have been waging a coordinated campaign to convince people they are offering investments that are somehow safe when the reality is they are indistinguishable from sports wagering.
“They target minors and individuals who have purposefully opted out, don’t adhere to any of our technical standards designed to protect consumers money and personal information, and violate all of Connecticut’s gaming laws. Thank you to our team at DCP for their diligent work on this issue, as well as their thoughtful regulation of the Connecticut gaming marketplace.
“We will continue to pursue anyone operating in violation of Connecticut’s gaming laws because those laws are, first and foremost, designed to protect Connecticut consumers.”
The CFTC has also sued Connecticut and two other states, recycling Kalshi’s legal theories and arguing that the prediction market should be regulated solely by the federal government.
Connecticut has moved to dismiss the lawsuit.