Connecticut has filed a new lawsuit against Kalshi seeking to block the platform’s sports markets. The state reiterates its claims that Kalshi’s sports-event contracts constitute illegal sports betting.
“Sports event contracts are no different than sports betting and are not magically shielded by federal law from Connecticut’s commonsense consumer protection laws”, said Attorney General William Tong in a press release.
Tong filed the lawsuit in state court, but Kalshi immediately moved the case to federal court. The company filed its own lawsuit against Connecticut authorities in November last year in response to the state’s cease-and-desist letter.
Connecticut Winning Legal Battle Against Kalshi
Moving cases to federal court has been Kalshi’s strategy in its legal battles, but while this worked initially, the company is now losing most cases in both state and federal courts. In total, 21 rulings have been issued, 17 of which have gone against Kalshi.
A federal judge has already ruled against Kalshi in Connecticut, denying the company an injunction earlier this month. Judge Vernon Oliver rejected Kalshi’s argument that its sports contracts fall within the definition of swaps under the Commodity Exchange Act (CEA).
Kalshi has appealed against the ruling to the Second Circuit. The CFTC backed the company with its own lawsuit against the state in April. That case remains ongoing with no judgments issued as yet.
The new lawsuit cites Judge Oliver’s ruling as evidence that there is no federal protection for Kalshi’s sports-event contracts. It also notes that judges in Maryland, Nevada, Massachusetts, Washington, Michigan, New York, Ohio, Arizona, and Utah have reached the same conclusion.
It asks for injunctive relief “to restrain Kalshi’s illegal offering, advertising, or making available” its sports markets in Connecticut. The state may expect this to be granted, which could lead Connecticut to join Michigan and Nevada in blocking Kalshi.
Kalshi Does Not Offer Consumer Protections, Claims Lawsuit
Attorney General Tong said Connecticut’s sports gambling laws are designed to protect consumers, a standard Kalshi is not meeting.
“These laws exist for a reason—to protect minors, to prevent problem gambling, to ensure your money is safe and your personal information is protected. None of that is happening now on Kalshi, and we’re suing to put a stop to it,” said Tong.
The lawsuit cites several examples of where Kalshi has failed to protect users, including:
- Allowing 18-year-olds to gamble on the platform
- Not offering the same problem gambling prevention tools as regulated sportsbooks
- Not making its finances available to independent auditors
- Offering markets on Connecticut college sports in violation of state laws
- Falsely framing its product as a financial investment rather than gambling
On the last point, the lawsuit notes instances in which Kalshi has advertised its product as gambling. It highlights an Instagram ad in which Kalshi claims to be “The First Nationwide Legal Sports Betting Platform.”
Licensed sportsbooks have also not always complied with Connecticut’s regulations, but the state’s regulators may impose penalties on such occasions.
For example, the Connecticut Department of Consumer Protection launched an investigation into DraftKings‘ marketing practices, which led the company to return $3 million to 7,000 Connecticut consumers last year.
Kalshi Ramps Up Partnerships With $1B in New Funding
The negative court rulings against Kalshi have not slowed the company’s growth. The lawsuit notes that its trading reached $178 billion for the year ended in April, a 32x increase from the previous year.
It is set to easily surpass that figure this year, with trading already reaching $138 billion since April. Of that, $114.7 billion has been bet on sports, accounting for 83% of total volume.
Since April, the company has received an additional $1.1 billion in funding, as revealed in a new SEC filing on Tuesday. Part of that money is being invested in new ad campaigns, lobbying efforts, and sponsorship deals with major sports organizations.
This week, the company announced deals with five MLB teams, including the Boston Red Sox. With no MLB team in the state, many Connecticut baseball fans travel to Boston, where Kalshi branding will appear at Fenway Park.
Like Connecticut, Massachusetts is locked in a legal battle with Kalshi. A judge similarly ruled that its sports markets are unlicensed sports betting and ordered the platform to block access in the state. Kalshi has appealed to the Massachusetts Supreme Court, where the case remains ongoing.
The post Connecticut Moves to Block Kalshi Sports Markets With New Lawsuit appeared first on CasinoBeats.
Connecticut has filed a new lawsuit against Kalshi seeking to block the platform’s sports markets. The state reiterates its claims that Kalshi’s sports-event contracts constitute illegal sports betting. “Sports event contracts are no different than sports betting and are not magically shielded by federal law from Connecticut’s commonsense consumer protection laws”, said Attorney General William
The post Connecticut Moves to Block Kalshi Sports Markets With New Lawsuit appeared first on CasinoBeats.