Kalshi wasted no time in reacting to the cease-and-desist letter it was served by the Department of Consumer Protection (DCP) in Connecticut.
Echoing its strategy in many other states, including Nevada, Maryland, New Jersey and Ohio, Kalshi has responded to the notice by suing for an injunction against the state gambling regulator.
In the case of Connecticut, the Gaming Division of the DCP acts as the regulator, and Commissioner Bryan Cafferelli was clear in his stance on the operation of prediction markets in the state, saying: "None of these entities possess 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."
Robinhood and Crypto.com were also directed to stop trading in Connecticut, though their next step in the state is less predictable.
Previously, Kalshi has taken the same steps to block state oversight, challenging it on the basis that it would be an unwarranted state-level intrusion into what is a federally regulated derivatives exchange.
This course of action was initially successful in Nevada, though Judge Andrew Gordon later moved to dissolve the injunction he had granted, forcing Kalshi out of the state.
In Connecticut, Kalshi is asking again for a preliminary and permanent injunction, as well as declaratory relief.
Citing the 1936 Commodity Exchange Act, the introduction to Kalshi's case states: "The text, purposes, and statutory history of the CEA leave no question that Congress sought to preempt state regulation of derivatives on exchanges overseen by the CFTC."
The court document also refers back to Kalshi's successful attempt to acquire a similar injunction in New Jersey, noting that the prospect of state regulation over the company would mean the company "faced irreparable harm."
Kalshi recently raised $1bn at a valuation of $11bn
