A US judge has granted prediction markets platform Kalshi a temporary reprieve from enforcement after the state of Connecticut sent it a cease and desist order last week for allegedly conducting unlicensed gambling.
The Connecticut Department of Consumer Protection (DCP) sent Kalshi, along with Robinhood and Crypto.com, cease and desist orders on December 2, accusing them of “conducting unlicensed online gambling, more specifically sports wagering, in Connecticut through its online sports event contracts.”
Kalshi sued the DCP a day later, arguing its event contracts “are lawful under federal law” and its platform was subject to the Commodity Futures Trading Commission’s “exclusive jurisdiction.” The company filed a motion on Friday to temporarily stop the DCP’s action.
Connecticut federal court judge Vernon Oliver said in an order on Monday that the DCP must “refrain from taking enforcement action against Kalshi” as the court considers the company’s bid to temporarily stop the regulator.
The order adds that the DCP should file a response to the company by January 9, and Kalshi should file further support for its motion by January 30, with oral arguments for the case to be held in mid-February.
Kalshi Faces Legal Challenges from Multiple US States
Kalshi operates as a federally regulated designated contract market under the CFTC. In January, it began offering contracts nationally that allow speculation on the outcome of various events, including sports and politics.
The platform has experienced significant growth this year, recording a record $4.54 billion in monthly trading volume in November. It has also attracted substantial investments, recently closing a $1 billion funding round at a valuation of $11 billion.
Despite its success, multiple US state regulators have raised concerns about Kalshi’s offerings, leading to lawsuits concerning whether the platform is subject to state-level gambling laws.
Kalshi initiated a lawsuit against the New York State Gaming Commission in October after the regulator issued a cease and desist order, asserting that Kalshi provided a platform for sports wagering without the necessary license.
In September, Massachusetts’ state attorney general filed a lawsuit against Kalshi in state court, a case that the company has sought to have dismissed. Throughout this year, Kalshi has also filed lawsuits against state regulators in New Jersey, Nevada, Maryland, and Ohio, each time alleging regulatory overreach.