Connecticut Files State Court Suit Against Kalshi — Ex Parte TRO Denied, Kalshi Counter-Sues the Next Day
Connecticut AG William Tong and Governor Ned Lamont filed a state court suit against Kalshi for unlicensed sports gambling, seeking injunction, disgorgement, and civil penalties. The ex parte TRO request was denied. Kalshi counter-sued the following day. Connecticut now has two simultaneous cases: this state court action and the federal D. Conn. PI denial already on appeal at the Second Circuit.
Connecticut Attorney General William Tong, Consumer Protection Commissioner Bryan Cafferelli, and Governor Ned Lamont filed a lawsuit in Connecticut Superior Court on August 27 accusing Kalshi of operating unlicensed sports gambling. The complaint seeks an injunction blocking sports event contracts, disgorgement, restitution, and civil penalties. The court denied an ex parte TRO — it would not ban Kalshi's sports contracts without giving the platform a chance to respond. Kalshi counter-sued state officials the next day. The filing creates a second simultaneous Connecticut case alongside the federal D. Conn. proceeding where Judge Oliver denied Kalshi's PI on August 11 with a 'not a swap' ruling now on appeal at the Second Circuit.
For UK readers, the dual-track enforcement strategy has a direct UK parallel. When the UK Gambling Commission pursues a major operator, it typically runs a licence review (regulatory track) simultaneously with a potential court action (enforcement track) — the two proceedings move in parallel, each creating pressure on the operator regardless of the other's outcome. Connecticut's approach mirrors this: the Second Circuit appeal tests the federal preemption question; the state court case tests whether state consumer protection enforcement can reach Kalshi independently. If the Second Circuit rules the CEA preempts state law, the state court case becomes a removal-to-federal-court fight and likely fails. If the Second Circuit upholds Judge Oliver's 'not a swap' reasoning — supported by the Ninth Circuit's August 28 ruling — the state court case becomes Connecticut's primary enforcement vehicle and proceeds on its own merits. Running both simultaneously maximises the probability of successful enforcement under any appellate outcome.
The August 27 filing, issued one day before the Ninth Circuit's 3-0 ruling, adds circumstantial support to the theory that state AGs are coordinating their litigation strategy. The Ninth Circuit decision — ruling sports contracts are not swaps, in direct conflict with the Third Circuit — gives state court judges outside the Ninth Circuit persuasive appellate authority to reject Kalshi's preemption argument. Connecticut Superior Court is not bound by either circuit's ruling, but both provide a legal framework for a state court to assess whether Kalshi's contracts are subject to state gambling law. The timing of Connecticut's state court filing, immediately before the most significant appellate decision yet in Kalshi's favour, suggests the state was positioned to cite the Ninth Circuit ruling in the preliminary injunction briefing that will follow the ex parte TRO denial.
Connecticut's enforcement posture — AG, governor, and consumer protection commissioner all named as plaintiffs — is more politically prominent than most state enforcement actions. Governor Lamont's explicit participation in the announcement reflects the state's calculation that prediction market enforcement is a visible consumer protection and public finance issue, not just a technical gambling law question. The civil penalties and disgorgement sought would, if successful, recoup profits Kalshi earned from Connecticut users since December 2025 — the date of the original cease-and-desist notices. The timeline of Connecticut's enforcement actions (C&D December 2025 → federal PI denied August 11 → state court suit August 27 → Ninth Circuit against Kalshi August 28) illustrates the pattern that has developed across multiple states: the enforcement track escalates as each legal theory is tested and the appellate picture clarifies.
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Recent updates
Massachusetts Supreme Court Ruling on Kalshi Now Imminent — First State High Court Decision on Prediction Markets
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