Connecticut Judge Rules Kalshi’s Sports Contracts Fall Outside CFTC’s Reach

A federal judge just handed Kalshi a partial win — and a partial headache — all in the same ruling. U.S. District Judge Vernon D. Oliver in Connecticut decided that Kalshi’s sports-event contracts don’t qualify as swaps under the Commodity Exchange Act, which means the Commodity Futures Trading Commission doesn’t have exclusive jurisdiction over them.

That sounds like good news for Kalshi. It’s not that simple.

What the Judge Actually Said

Oliver was pretty clear that figuring out what counts as a swap is the judiciary’s job, not the CFTC’s. A contract has to be traded on a designated contract market before the CFTC can even claim authority over it. The judge also leaned on prior case law out of Nevada, drawing a line between the word “event” and the word “outcome” — two things that sound similar but aren’t legally the same.

His reasoning went further. For a contract to carry real regulatory weight as a swap, the underlying event needs intrinsic financial or commercial implications — something tied to the mechanics of commerce, not just who wins on a Saturday afternoon. Sports events do generate economic activity, sure. Ticket sales, broadcast rights, advertising deals. But the outcome of a game? Oliver didn’t see that as carrying the same kind of financial consequence that swap regulation was built to address.

Sports-event contracts make up somewhere between 80% and 90% of Kalshi’s entire contract volume, and they contribute a similar share of revenue. That’s basically the whole business. So the jurisdictional question here isn’t academic — it’s existential for the company’s model.

Kalshi’s Legal Battles Keep Piling Up

Kalshi was valued at around $11 billion earlier this year and has roughly 24,000 users in Connecticut alone. The CFTC, despite sitting on a pile of contracts it could have reviewed under a special rule that preserves state authority, hasn’t reviewed a single one. Oliver noted that too.

But the judge didn’t give Kalshi everything it wanted. The court rejected the company’s claim of irreparable harm, and the language was blunt: the financial losses were, in the judge’s view, largely self-inflicted. Kalshi kept offering contracts even after repeated regulatory warnings. And since the company is already building out geofencing for other states, the added compliance cost for Connecticut probably won’t be catastrophic.

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Coinbase Financial Markets got pulled into this too. It started offering Kalshi’s contracts as a futures commission merchant back in January 2026, and while Connecticut didn’t come after Coinbase directly with a cease-and-desist, the platform still lost a related motion. The ruling against Coinbase tracked the same logic as the ruling against Kalshi.

Connecticut’s enforcement sweep in December was broader than just Kalshi — it also swept in Robinhood Derivatives and Crypto.com. State officials there have been consistent: prediction market wagers aren’t investments, and they won’t treat them as such.

14 Lawsuits and a Messy Map of Rulings

Kalshi has now filed 14 lawsuits against various states over these same issues. The results are all over the place. Federal courts are split. State courts, though, have been pretty uniformly bad for Kalshi — every state court decision so far has gone against the company.

The Utah ruling in KalshiEX LLC v. Cox, handed down August 4, went against Kalshi’s interpretation of its contracts as swaps. Massachusetts, Nevada, and Michigan have all ordered geofencing. Kalshi agreed to comply in Nevada by August 12 and faces a similar deadline in Michigan. Minnesota went the other direction — a judge there temporarily blocked the state’s ban, treating a World Cup winner contract as potentially a swap, which is basically the opposite conclusion from Connecticut.

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So depending on which state you’re in, the same contract might be a swap, might not be a swap, might be blocked, or might be temporarily unblocked. It’s a mess.

Genius Sports signed official-data, integrity, and marketing agreements with both Polymarket on August 4 and Kalshi on August 5, which tells you that commercial interest in prediction markets hasn’t dried up despite the legal fog.

A Kalshi spokesperson said the company disagrees with the Connecticut ruling and is weighing its legal options. No specifics on what comes next. Judge Oliver ordered both sides to file their Rule 26(f) report by August 24, with Connecticut’s response to the complaint due August 31.