Connecticut Files State Court Suit Against Kalshi — Ex Parte TRO Denied, Kalshi Counter-Sues the Next Day
Connecticut Attorney General William Tong, Consumer Protection Commissioner Bryan Cafferelli, and Governor Ned Lamont have filed a state court lawsuit against Kalshi in Connecticut Superior Court, seeking an injunction to block sports event contracts, plus disgorgement, restitution, and civil penalties. The court denied an immediate ex parte temporary restraining order. Kalshi counter-sued state officials the following day. The state court suit is separate from the federal D. Connecticut case — where Judge Oliver denied Kalshi's preliminary injunction on August 11 — creating two simultaneous Connecticut proceedings targeting the same contracts.
Connecticut Attorney General William Tong, Department of 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 in the state. The complaint seeks injunctive relief to stop Kalshi from offering sports event contracts to Connecticut residents, plus disgorgement of profits, restitution for affected users, and civil penalties. The Connecticut Superior Court denied the state's request for an immediate ex parte TRO — a restraining order issued without first giving Kalshi an opportunity to respond — meaning Kalshi can continue operating while the litigation proceeds. Kalshi counter-sued Connecticut state officials the following day.
The state court filing is a structural escalation of the Connecticut enforcement action. Connecticut's Department of Consumer Protection issued cease-and-desist notices in December 2025, triggering Kalshi's federal court suit and the CFTC's intervention. That federal track produced a PI denial on August 11 — Judge Oliver's 'not a swap' ruling, now on appeal to the Second Circuit. The state court suit is an entirely separate enforcement track: rather than defending against Kalshi's federal preemption argument, AG Tong is now bringing affirmative state enforcement claims through a state court that does not share the D.Conn. federal court's preemption framework. Kalshi will almost certainly seek to remove the state court case to federal court, at which point the removal and remand fight will produce its own procedural litigation. Connecticut's aggressive two-track approach — defending in the Second Circuit while simultaneously opening a new state court front — reflects a strategy of using procedural volume to force Kalshi to fight on multiple fronts simultaneously.
The timing of the Connecticut state court suit, one day before the Ninth Circuit's 3-0 ruling against Kalshi, was likely coordinated with other state AG offices watching the appellate landscape. The Ninth Circuit decision — issued August 28, the day after Connecticut's filing — provides the most authoritative appellate support yet for the argument that sports event contracts are not swaps and are subject to state regulation. Although Connecticut is in the Second Circuit (not the Ninth), the Ninth Circuit ruling is persuasive authority that state courts and federal courts outside the Ninth Circuit can cite. CT AG Tong's office would have had access to the draft or circulating opinion before publication; the filing timing suggests the state was ready to move the moment appellate support materialized.
Connecticut now has two simultaneous prediction market cases: the federal case (D. Conn. PI denial on appeal to the Second Circuit) and the state court case (Kalshi counter-suit filed August 28). The Second Circuit appeal will resolve the federal preemption question; the state court case tests whether state consumer protection and gambling enforcement can reach Kalshi independently of the CFTC preemption argument. If the Second Circuit eventually upholds Judge Oliver's 'not a swap' reasoning and rules that Connecticut's laws apply, the state court case becomes the enforcement vehicle. If the Second Circuit reverses and rules the CEA preempts state law, the state court case is likely stayed or removed to federal court and dismissed. Connecticut's dual-track approach maximizes the probability that some enforcement vehicle is available regardless of how the federal preemption question resolves.
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Recent updates
Massachusetts Supreme Court Ruling on Kalshi Now Imminent — First State High Court Decision on Prediction Markets
The Massachusetts Supreme Judicial Court heard oral arguments on May 5 in the Kalshi prediction markets case and is expected to issue a decision within weeks. The SJC appeared skeptical of Kalshi's argument that CFTC regulation preempts state gambling law, and the court's ruling will be the first state supreme court decision on prediction markets anywhere in the country. Massachusetts AG Andrea Campbell secured a preliminary injunction blocking Kalshi's sports contracts in January 2026. The CFTC filed an amicus brief supporting Kalshi; a coalition of 38 state attorneys general filed an opposing brief supporting Massachusetts.
27 States Back California Tribes Suing Kalshi Over Sports Contracts Under Indian Gaming Law
Three California tribes — Blue Lake Rancheria, Chicken Ranch Rancheria of Me-Wuk Indians, and Picayune Rancheria of the Chukchansi Indians — are separately challenging Kalshi's sports event contracts in the Ninth Circuit under the Indian Gaming Regulatory Act, a federal law distinct from the Commodity Exchange Act preemption arguments at issue in Nevada, New Jersey, and Connecticut. The Ninth Circuit refused to consolidate the tribal case with the Nevada case. A Ninth Circuit panel appeared skeptical of Kalshi in July hearings, and 27 states plus the District of Columbia have filed amicus briefs supporting the tribes. The IGRA theory, if it succeeds, could block Kalshi from operating sports contracts in any state where tribal gaming compacts exist — a category that includes most US states.
SCOTUS Review of Prediction Markets Hits 64% on Polymarket — New Jersey Files Cert Petition September 3
The probability of Supreme Court review of prediction market sports contracts jumped from around 30% to 64% on Polymarket's own platform within hours of the Ninth Circuit's August 28 ruling — with $976,000 in trading volume flowing into the contract. New Jersey, the losing party in the Third Circuit's April ruling that went for Kalshi, is filing a certiorari petition on September 3. The Ninth Circuit's 3-0 ruling against Kalshi directly contradicts the Third Circuit's 2-1 ruling for Kalshi, creating the clearest possible circuit split trigger for SCOTUS to grant review.