TLDR A Connecticut federal judge denied Kalshi’s request to block state gambling law enforcement. The court ruled Kalshi’s sports event contracts do not qualify as swaps under federal commodities law. The judge rejected Kalshi’s claim that federal law preempts Connecticut’s gambling rules. Coinbase’s request for a similar injunction was denied in a related case the same day. Sports contracts made up between 80% and 90% of Kalshi’s total revenue.
A federal judge in Connecticut has ruled against Kalshi in its fight over state gambling laws. U.S. District Judge Vernon D. Oliver said the company is unlikely to win its case against the Connecticut Department of Consumer Protection.
Kalshi had asked the court to stop the state from enforcing its gambling laws against the company’s sports contracts. The judge said no.
Oliver focused on two main questions. The first was whether Kalshi’s sports contracts count as swaps under the Commodity Exchange Act. The second was whether federal law blocks states from regulating them at all.
Judge Finds Sports Contracts Are Not Swaps
Oliver ruled that Kalshi’s sports contracts are not swaps. He said the law separates an event from its outcome.
He used the Kentucky Derby as an example. The race itself is the event. Who wins it is an outcome, not a separate event.
Oliver quoted a similar ruling from Nevada in a case against Crypto.com. He agreed with that court’s reasoning.
A federal judge in Tennessee reached a different conclusion earlier this year. That judge said an outcome can count as its own event under the law.
Oliver also found that Kalshi’s contracts fail another part of the swap definition. He said they are not tied to a financial or economic consequence tied to the event itself.
The judge then turned to Kalshi’s preemption argument. Kalshi