A judge in the US has granted Kalshi, a prediction markets platform, temporary relief from enforcement following a cease and desist order from Connecticut last week, which accused it of conducting unlicensed gambling.
The Connecticut Department of Consumer Protection (DCP) issued cease and desist orders to Kalshi, as well as Robinhood and Crypto.com, on Dec. 2, alleging they were “conducting unlicensed online gambling, specifically sports wagering, in Connecticut through its online sports event contracts.”
Kalshi responded the next day by suing the DCP, claiming its event contracts are “lawful under federal law” and that its platform falls under the exclusive jurisdiction of the Commodity Futures Trading Commission (CFTC). It also filed a motion on Friday seeking to temporarily halt the DCP’s enforcement action.
In an order issued on Monday, Connecticut federal court judge Vernon Oliver mandated that the DCP must “refrain from taking enforcement action against Kalshi” while the court reviews the company’s request to stop the regulator’s actions temporarily.
The order stipulates that the DCP is required to respond to Kalshi by Jan. 9, with Kalshi to submit further support for its motion by Jan. 30. Oral arguments for the case are scheduled for mid-February.
Kalshi faces challenges from several US states
Kalshi is a federally regulated designated contract maker under the CFTC and began offering contracts nationally in January that allow betting on various outcomes, including sports and politics.
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The platform has gained significant popularity, achieving a record monthly trading volume of $4.54 billion in November, and securing billions in investments, with Kalshi concluding a $1 billion funding round earlier this month at a valuation of $11 billion.
Nonetheless, several state regulators across the US have raised concerns regarding Kalshi’s offerings, leading to multiple lawsuits regarding its compliance with state gambling laws.
Kalshi filed a lawsuit against the New York State Gaming Commission in October after it issued a cease and desist order, claiming Kalshi was facilitating sports wagering without a license.
In September, the state attorney general of Massachusetts sued Kalshi in state court, which the company requested to dismiss. This year alone, Kalshi has also taken legal action against state regulators in New Jersey, Nevada, Maryland, and Ohio, alleging regulatory overreach from each.
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