A Connecticut federal judge has denied KalshiEX LLC’s attempt to stop the state from enforcing its gaming laws against the company’s sports-related event contracts. The court ruled that the products are not swaps and therefore are not pre-empted by federal law, leaving Connecticut free to continue its case for now.
PlayUSA, which reported the ruling, described it as an early procedural win for the state. The dispute sits at the fault line between two legal regimes: whether Kalshi’s contracts belong with federally regulated derivatives, or whether they are closer to gambling products that states may police under their own laws.
As covered in June, Kalshi also sued Illinois over a similar effort to regulate its prediction-market sports contracts before the state law took effect. That challenge is part of a wider set of cases in which different courts have reached different results.
In a separate New Jersey case, the U.S. Court of Appeals for the Third Circuit said Kalshi operates a CFTC-licensed designated contract market and offers event contracts, a type of derivative. The court said the Commodity Exchange Act’s special rule lets the CFTC review and prohibit certain event contracts, including those involving gaming, but it concluded that event contracts, including sports-event contracts on a CFTC-licensed market, are swaps. It also affirmed a preliminary injunction on Kalshi’s pre-emption theory and noted that the CFTC had not yet determined that Kalshi’s sports contracts were contrary to the public interest.
A federal judge in the Southern District of New York reached a different result on Kalshi’s request for emergency relief. That court denied the company’s motion for a temporary restraining order and preliminary injunction against the New York State Gaming Commission, saying Kalshi was not licensed to offer sports wagering in New York and that the decision could be made on a paper record because the parties agreed there were no relevant facts in dispute.
The CFTC has also proposed amendments on prediction markets and public-interest determinations, including a definition of gaming, amid a market the agency said topped $25 billion in trading volume across CFTC-registered prediction markets in 2025.
