Kalshi asks appeals court to halt Connecticut gambling enforcement during appeal

Kalshi is turning to a federal appeals court in hopes of stopping Connecticut from enforcing its gambling laws against the company’s sports-event contracts while its legal challenge continues.

On Monday (August 17), Kalshi filed an emergency injunction request with the Second Circuit. The move followed U.S. District Judge Vernon D. Oliver’s August 15 refusal to pause enforcement while Kalshi appeals his earlier decision denying preliminary relief.

Kalshi maintains that the Commodity Futures Trading Commission (CFTC) has exclusive authority over its contracts under the Commodity Exchange Act. Connecticut officials disagree and have threatened enforcement against the prediction-market operator.

“The district court therefore badly erred in denying Kalshi a preliminary injunction, and this Court’s intervention is necessary to prevent Kalshi from suffering irreparable harms under preempted state law before this Court has a chance to weigh in,” the filing says.

Kalshi faces Connecticut enforcement despite federal regulator’s backing

Kalshi is also relying on an August 11 CFTC emergency order issued after New York’s attorney general sued over its event contracts. The regulator instructed Kalshi to keep operating normally even if a New York state court directed otherwise.

“Absent an injunction, Defendants could put Kalshi to an untenable choice between compliance with state law and a direct order from Kalshi’s federal regulator to do the opposite.”

Oliver was unconvinced. He ruled that the sports-event contracts are not swaps covered by the CFTC’s exclusive jurisdiction and said federal law does not displace Connecticut’s authority over sports wagering.

The court said the CFTC “lacks the authority to dictate an order that conflicts with this Court’s decision,” and found that the agency’s intervention did not substantially improve Kalshi’s chances of prevailing.

Oliver also said an appeal itself was not enough to justify emergency protection.

“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.

“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 says Connecticut enforcement could bring criminal prosecution and significant liability. Following state restrictions, it argues, would instead interfere with its federal obligations, restrict nationwide access and cause unrecoverable financial losses.

“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 fight dates to Kalshi’s January 2025 expansion into sports contracts. By February 2026, those products generated 80% to 90% of its listed contracts and revenue, while Kalshi was valued at about $11 billion.

Connecticut sent 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.”

Kalshi now wants the Second Circuit to halt that enforcement until its appeal is decided.

Featured image: Kalshi / Canva

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