A Connecticut Court Rules Kalshi's Sports Contracts Were Never Swaps

Kalshi lost again, this time in federal court. Judge Vernon D. Oliver of the US District Court for the District of Connecticut denied the prediction-market operator's request for a preliminary injunction against state regulators, holding that its sports-event contracts are not swaps under the Commodity Exchange Act. If the contracts are not swaps, the CFTC holds no exclusive jurisdiction over them, and Connecticut's gambling law reaches them. Kalshi had asked the court to block enforcement of cease-and-desist orders the state issued in December 2025. The court declined.

What counts as a swap

The definition turns on a phrase. The Commodity Exchange Act reaches contracts tied to the "occurrence, nonoccurrence, or extent of the occurrence" of an event. Oliver reasoned that the winner of a game is an outcome of an event, not the occurrence of one, and that a contract settling on a winner therefore sits outside the statutory definition. The distinction sounds narrow. It carries the whole case, because Kalshi's defense against every state gambling regulator is built on swap status and the exclusive federal oversight that comes with it. The ruling also pointed at what that federal oversight has amounted to in practice.

The court noted that the CFTC "has never reviewed a single Kalshi sports contract."

The preemption theory takes a second hit

Kalshi runs the same argument in every state: as a CFTC-designated exchange, its markets answer to a federal regulator with exclusive jurisdiction, so state gambling law cannot touch them. Oliver rejected that reading of the statute, writing that it "reflects an intent to preserve state authority rather than displace it." A state court reached a compatible result in July, when a King County judge in Washington enjoined Kalshi under state gambling law. That ruling came from a state bench. This one comes from the federal system Kalshi itself invoked, and the theory has now failed in both.

Two dates in the write-ups

The ruling's date is reported two ways. Lowenstein Sandler's fintech newsletter and the betting-industry outlet Covers both carry 10 August, a Monday; a news.bitcoin.com account dates it 11 August. The two do not reconcile, and we could not establish which matches the docket entry. This article uses 10 August, the date given by two of the three sources.

Most of the business is on the line

Sports contracts were 80 to 90% of Kalshi's listings and revenue, per figures cited across coverage of the case. The Connecticut cease-and-desist orders stay enforceable while the case continues; a denied preliminary injunction is not a final judgment, but it strips away the shield Kalshi wanted in the meantime. The federal side has been tightening as well. In late July the CFTC issued an advisory tightening event-contract self-certifications, the process that lets new listings reach the market without prior agency review. For a company whose revenue leans this hard on sports markets, the question after Connecticut is bigger than one docket. It is how many more states now run the argument that two courts in three weeks have accepted.