Kalshi Wins Temporary Restraint Against Connecticut Gambling Order
A federal judge has temporarily blocked Connecticut’s Department of Consumer Protection from enforcing a Dec. 2 cease-and-desist order that accused prediction markets platform Kalshi of offering unlicensed online sports wagering via “online sports event contracts.” Kalshi sued, arguing its event contracts are federally regulated derivatives under the Commodity Exchange Act and fall under the Commodity Futures Trading Commission’s (CFTC) exclusive jurisdiction. Judge Vernon Oliver ordered the DCP to refrain from enforcement while the court considers Kalshi’s request for temporary relief. DCP must respond by Jan. 9, Kalshi will file supplemental arguments by Jan. 30, and oral argument is scheduled for mid‑February. Kalshi — designated a CFTC-regulated contract market — launched nationwide contracts earlier this year, reported record monthly trading volume of $4.54 billion in November, and recently raised $1 billion at a reported $11 billion valuation. The company faces similar state actions or litigation in New York, Massachusetts, New Jersey, Nevada, Maryland and Ohio. Traders should monitor upcoming court dates and state responses closely: rulings could affect Kalshi’s product availability, liquidity and transactional flows, set regulatory precedent for prediction markets, and influence related derivatives and market-maker activity.
Neutral
The ruling is a temporary legal reprieve for Kalshi rather than a final regulatory victory. Short-term market impact on Kalshi-linked tokens or derivatives is likely limited: enforcement is paused, so product availability and liquidity remain intact for now, which reduces immediate downside risk. However, uncertainty persists because multiple state actions and upcoming court dates could restrict Kalshi’s offerings or create fragmentation across jurisdictions if states prevail. That creates medium-term regulatory risk that could reduce liquidity and user growth if adverse rulings follow. Conversely, a final affirmation of CFTC jurisdiction would be a structural positive, supporting nationwide operations and deeper liquidity. Given these offsetting possibilities—temporary relief but unresolved legal risk—the overall price impact is best characterized as neutral until decisive court outcomes or regulatory clarity materialize.