Kalshi takes the Connecticut regulator to court over a cease and desist letter.

Add Connecticut to the increasing list of states involved in a legal battle with Kalshi.

The Connecticut Department of Consumer Protection’s (DCP) Gaming Division, which regulates gaming in the state, issued cease and desist letters to Robinhood, Kalshi, and Crypto.com on December 2, informing all three that the government group believes the sports-related event contracts they offer violate state gaming law.

In a news statement regarding the cease and desist letters, DCP Commissioner Bryan T. Cafferelli stated that “only licensed entities may offer sports wagering in the state of Connecticut.” “None of these organizations are licensed to provide gambling in our state, and even if they were, their contracts would be in violation of a number of other state laws and regulations, such as providing gambling to people younger than 21.”

The day following the C&D letter, Kalshi filed the lawsuit.

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In response, Kalshi sued the regulator in Connecticut District Court, requesting an injunction that would prevent the cease and desist from being enforced the next day. Crypto.com and Robinhood have not yet brought a comparable lawsuit.

Kalshi’s action contends, as it has in numerous other states, that the Commodity Exchange Act (CEA) preempts state gaming laws and that the Commodity Futures Trading Commission (CFTC) is solely responsible for regulating all even contracts.

It also presented an argument in its court battle with the Massachusetts Gaming Commission (MGC) that what the regulator is requesting would take down every contract provided on Kalshi’s website.

Kalshi claims. Connecticut is interested with more than sports.

The complaint refers to the cease and desist letter’s content, specifically how Connecticut regulators define “gambling”.

Since Connecticut law “prohibits gambling,” which is defined as “risking any money, credit, deposit or other thing of value for gain contingent in whole or in part upon lot, chance, or the operation of a gambling device,” and Kalshi’s actions do not “fall within any of the excepted activities to the prohibition on gambling,” DCP’s cease-and-desist letter suggested that all of Kalshi’s event contracts are illegal.

But it appears that the DCP letter is limited to sports contracts.

The letter states, “The Department of Consumer Protection (the “Department”) has learned that KalshiEX LLC, d/b/a Kalshi (“Kalshi”), is engaging in unlicensed online gambling, specifically sports wagering, in Connecticut through its online sports event contracts.”

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