The gaming division of the Connecticut Department of Consumer Protection has opened an investigation into Kalshi, adding to the list of states that are taking a closer look at the federally regulated prediction market’s products.
A spokesperson for the regulator told Covers the investigation began in the fall, but added they did not have an ETA for when a conclusion could be reached or information about what the result may be.
Connecticut’s concerns about Kalshi are not entirely clear.
However, the New England state is not the only one scrutinizing the company's operations, as Kalshi's launch of sports-related event contracts earlier this year helped triggered recent cease-and-desist letters from regulators in Nevada, New Jersey, and Ohio.
Massachusetts regulators are also reportedly investigating Robinhood over the popular trading platform's recently launched “prediction markets hub."
The hub allows for the buying and selling of sports event contracts, and it relies on a partnership with Kalshi.
“The DCP Gaming Division has an open investigation into prediction market exchange Kalshi, which is suspected of operating in violation of Connecticut law,” Connecticut Department of Consumer Protection spokesperson Kaitlyn Krasselt told Covers in an email on Tuesday. “I’m not able to provide any additional information at this time.”
Krasselt later told Covers that Connecticut's investigation started in the fall.
No more Mr. Nice Regulator
The state has sent cease-and-desist letters in the past to entities it believed were violating Connecticut sports betting law, such as the offshore gambling site Bovada.
However, Connecticut's Kalshi-related concerns highlight the growing interest that state-level regulators of legal sports betting have in federally regulated prediction markets, wherein users buy and sell contracts tied to event outcomes.
The trading of sports event contracts allows people to make de facto wagers on sporting events in all 50 U.S. states, not just the ones that have legalized sports betting.
Now, though, states with legalized sports betting are increasingly voicing complaints that sports event contracts are a little too much like out-and-out sports wagering. There are also lingering concerns about election-related contracts, which may account for Connecticut opening an investigation in the fall.
Kalshi had legal hurdles to overcome to offer contracts connected to last year’s presidential election, which led to increased popularity for the so-called prediction markets. Yet it was when event contracts expanded this year to include sporting events like the Super Bowl and March Madness that pushback from state regulators ramped up.
On Monday, the Ohio Casino Control Commission became the latest state gaming regulator to issue cease-and-desist notices in connection with sports event contracts, joining Nevada and New Jersey.
Ohio also took the step of serving Crypto.com with a cease-and-desist notice, in addition to Kalshi and Robinhood.
According to the Ohio sports betting regulator, sports event contracts meet the definition of sports betting under state law and require a license to be legally offered.
“Purchasing a contract based on which team a person thinks will win a sporting event is no different than placing a bet through a traditional sportsbook,” Ohio Casino Control Commission Executive Director Matthew Schuler said in a press release. “The only difference is that these event contracts do not have the consumer protections required under Ohio law and are accessible to Ohioans under 21 years of age. The Commission must take action to fulfill its statutory responsibilities and ensure the integrity of sports gaming in Ohio.”
And now Kalshi has been hit with a cease-and-desist letter by Ohio regulators in connection with sports event contracts. The Ohio Casino Control Commission sent C&Ds to Robinhood and Crypto dot com as well, per a press release. pic.twitter.com/VuEPPux4aR
— Geoff Zochodne (@GeoffZochodne) March 31, 2025
A spokesperson for Kalshi declined to comment on Tuesday.
Kalshi, however, has sued in Nevada and New Jersey to try to stave off efforts to shut down the trading of sports event contracts.
The exchange has argued that it is operating under federal law and under the federal oversight of the Commodity Futures Trading Commission, which states can’t override.
“Even though Kalshi’s contracts are lawful under the federal law that exclusively governs them, Defendants are threatening to shut down these contracts in New Jersey immediately,” Kalshi argued in its Garden State lawsuit. “Defendants’ actions would subject Kalshi to the patchwork of state regulation that Congress created the CFTC to prevent and would interfere with the CFTC’s exclusive authority to regulate futures derivatives contracts in the exchanges it oversees.”
This story has been updated from its original version to include new information about the timing of Connecticut's investigation, which was provided after publication.
