Kalshi Wins Temporary Pause Against Connecticut Gambling Order - A Regulatory Reprieve for Prediction Markets

Prediction markets just dodged a regulatory bullet—for now.

Kalshi, the platform letting users bet on everything from election outcomes to Fed rate hikes, secured a temporary pause against Connecticut's gambling enforcement order. The move throws cold water on the state's attempt to lump speculative event contracts with casino slots and sports betting.

The Legal Sidestep

This isn't a final win, but a procedural timeout. The pause freezes Connecticut's order while courts weigh whether event contracts constitute gambling or protected financial speculation. Kalshi argues its markets provide price discovery and risk hedging—functions Wall Street charges premium fees for, naturally.

Why Regulators Are Twitchy

Connecticut's move spotlighted a core tension: when does a 'prediction' become a regulated security or a banned wager? Traditional finance draws neat lines; decentralized prediction markets blur them entirely. The state's concern? Unlicensed gambling masquerading as innovation—a classic regulatory panic.

The Bigger Fight

This skirmish is part of a wider war over who controls future-facing financial tools. From crypto derivatives to political event contracts, legacy systems are scrambling to fit new instruments into old boxes. The temporary pause suggests courts might need more time—or different frameworks—to decide.

Prediction markets keep testing where speculation ends and information begins. Connecticut's stalled order proves regulators are still playing catch-up—while traders place bets on the outcome. Just another day where finance and gambling sip from the same glass, with regulators arguing over the tab.

Judge Halts Connecticut Action as Kalshi Claims Federal Oversight

A day later, Kalshi sued the agency, arguing that its event contracts fall squarely under federal derivatives law and that the Commodity Futures Trading Commission (CFTC), not individual states, has “exclusive jurisdiction” over its platform.

On Monday, Judge Vernon Oliver ordered the DCP to refrain from taking action while the court reviews Kalshi’s request for temporary relief.

Under the schedule set by the court, the DCP must respond by Jan. 9, Kalshi will submit additional arguments by Jan. 30, and oral arguments are expected in mid-February.

Kalshi, designated by the CFTC as a federally regulated contract market, began offering event-based contracts nationwide earlier this year, including markets tied to sports, weather, and political outcomes.

JUST IN: Kalshi has sued the Connecticut Department of Consumer Protection in federal court alleging that state enforcement over sports event contracts is preempted by the CEA and it "intends to imminently seek an emergency temporary restraining order and preliminary injunction." pic.twitter.com/BdcoiPXP1a

However, the platform’s expansion has triggered a wave of state-level challenges. Regulators in several states argue that Kalshi’s contracts resemble sports bets and fall under gambling laws.

Kalshi says its products are federally regulated financial instruments, not wagers, and that state crackdowns violate the Commodity Exchange Act.

Connecticut is the latest in a string of regulatory battles. In October, Kalshi sued the New York State Gaming Commission after it issued a similar cease-and-desist order.

Massachusetts’ attorney general took the company to court in September, and Kalshi has filed suits this year against regulators in New Jersey, Nevada, Maryland, and Ohio, accusing each of overstepping their authority.

Kalshi Partners with CNN After $1B Funding Round

As reported, Kalshi has secured a major media breakthrough after signing a partnership with CNN, making the company the network’s official prediction markets partner while closing a $1 billion funding round at an $11 billion valuation.

Under the agreement, Kalshi’s real-time market data will be used inside CNN’s newsroom to support reporting on politics, economics, and major cultural events.

The funding follows a surge in activity across prediction platforms. According to Token Terminal data cited by the company, Kalshi posted record trading volume of $4.54 billion in November, beating October’s $4.49 billion.

Kalshi said weekly volumes are now exceeding $1 billion, representing growth of more than 1,000% since 2024.

Its closest competitor, Polymarket, also recorded a strong November, hitting a monthly total of $3.76 billion after crossing $3 billion in October.

Meanwhile, Mike Novogratz’s Galaxy Digital is in talks with Polymarket and Kalshi about becoming a liquidity provider, as on-chain betting on real-world events draws more attention from both retail traders and Wall Street.