Connecticut judge rejects Kalshi bid to block state gambling laws
U.S. District Judge Vernon D. Oliver denied Kalshi’s request for a preliminary injunction against Connecticut, finding that its sports-event contracts are not swaps under federal commodities law.
U.S.- A Connecticut federal judge has rejected Kalshi’s attempt to prevent the state from enforcing its gambling laws against the prediction market. Judge Vernon D. Oliver concluded that Kalshi was unlikely to succeed in arguing that its sports-event contracts qualify as swaps under the Commodity Exchange Act (CEA) or that federal law pre-empts Connecticut’s gambling regulations.
“Kalshi characterises its sports-related event contracts in various ways, but at bottom, they are sports wagers,” Oliver wrote, citing a previous Nevada ruling against the company. The decision adds to a growing number of rulings rejecting Kalshi’s central legal arguments, although federal courts have reached different conclusions in similar cases.
Oliver found that Kalshi’s sports contracts do not meet the CEA’s definition of a swap. His analysis focused on Congress’ use of the terms “occurrence” and “event,” concluding that an event refers to whether something happens and the extent to which it occurs, rather than the possible outcomes within that event. He concluded that the company’s contracts depend on sporting outcomes or individual in-game occurrences rather than on whether an underlying event occurs. The court also found that the contracts were not associated with a potential financial, economic or commercial consequence as required by the CEA.
Oliver separately rejected Kalshi’s federal pre-emption argument. Even if the contracts were considered swaps, he said, the CEA would not prevent Connecticut from enforcing its gambling laws.
The judge pointed to the CEA’s provisions addressing gaming and its specific rules on state-law pre-emption, finding no indication that Congress intended to displace state regulation in this area. “Taken together, the CEA’s text, structure, and targeted pre-emption provisions demonstrate that Congress did not intend the statute to occupy the field of state regulation at issue here,” he stated.
Oliver also rejected Kalshi’s claim that Connecticut’s requirements conflict with CFTC rules on impartial market access. According to the judge, those rules do not require Kalshi to offer its contracts nationwide. The court concluded that Connecticut’s gambling laws “complement rather than conflict with federal law.”
