A federal judge in Connecticut will allow state officials to keep enforcing gambling laws against prediction-market operator Kalshi while the company takes its case to an appeals court.
U.S. District Judge Vernon D. Oliver turned down Kalshi’s emergency bid for an injunction pending appeal on August 15. He also denied its backup request for temporary administrative relief while Kalshi asks the Second Circuit for an injunction.
The latest order, which has been reviewed by ReadWrite, followed Oliver’s August 10 decision denying a preliminary injunction against Connecticut officials and the Department of Consumer Protection. Kalshi appealed that ruling before returning to Oliver three days later for protection from enforcement during the appeal.
Oliver had concluded that Kalshi’s sports-event contracts do not qualify as “swaps” under the Commodity Exchange Act, putting them outside the Commodity Futures Trading Commission’s exclusive jurisdiction. He also found that federal law does not displace Connecticut’s longstanding power to regulate sports wagering.
Kalshi faces higher hurdle during Connecticut appeal
Getting an injunction during an appeal requires Kalshi to make a stronger case for likely success than it needed for preliminary relief. Oliver found the company had not cleared that higher threshold.
Several arguments again challenged his conclusions about swaps and federal preemption, with Kalshi saying the Second Circuit could reach a different result.
“While the Second Circuit may ultimately ‘disagree with certain features of this Court’s decision,’ the possibility for reversal alone (a possibility that exists in every appeal) does not warrant the extraordinary measure of injunctive relief,” Oliver wrote.
Oliver likewise found that unsettled law and differing decisions elsewhere were not enough.
“A split in caselaw outside of this Circuit does not justify injunctive relief pending appeal, nor does the sheer fact that this is an issue of first impression,” Oliver wrote.
Kalshi also cited CFTC guidance issued August 11 after New York’s attorney general sued over its event contracts. The agency declared a “market emergency” and instructed Kalshi to keep its exchange operating normally even if a New York state court ordered otherwise.
Oliver found that directive did not alter his earlier conclusion about the contracts falling outside exclusive CFTC jurisdiction.
Kalshi also argued that Connecticut enforcement could expose it to civil or criminal liability, while compliance could mean shutting trading to Connecticut customers and suffering financial and reputational damage. Oliver again found those concerns insufficient, including what he viewed as speculative risks of CFTC action.
“Kalshi has not provided a sufficiently compelling basis to further restrict Connecticut’s enforcement of its gambling regulatory regime during the pendency of the appeal,” Oliver wrote.
The dispute began after Kalshi expanded into sports contracts in January 2025. By a February 2026 hearing, those products accounted for 80% to 90% of its listed contracts and revenue, while the company was valued around $11 billion.
Connecticut sent Kalshi a cease-and-desist letter in December 2025. Commissioner Bryan T. Cafferelli said, “Only licensed entities may offer sports wagering in the state of Connecticut. None of these entities possesses a license to offer wagering in our state, and even if they did, their contracts violate numerous other state laws and policies, including offering wagers to individuals under the age of 21.”
Oliver ultimately found that neither the equities nor public interest supported blocking enforcement. Meanwhile, Gov. Ned Lamont’s proposed Bill No. 5038, which would have added prediction-market safeguards and required a statewide study, has died in committee.
Featured image: Kalshi / Canva
The post Connecticut judge rejects Kalshi bid to pause gambling enforcement during appeal appeared first on ReadWrite.
This articles is written by : Fady Askharoun Samy Askharoun
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