Is Kalshi legal in Connecticut?

On December 2, 2025, the Department of Consumer Protection's director of gaming, Kristofer Gilman, sent KalshiEX LLC a cease-and-desist order (Case No. 2025-77). It says Kalshi is "conducting unlicensed online gambling, more specifically sports wagering" through its sports event contracts, in violation of the gambling statutes and the Connecticut Unfair Trade Practices Act (p.1). It adds that Kalshi holds no online gaming operator's license, lets people under 21 trade, allows wagers on Connecticut college teams, and that its contracts are void under the state's wagering-contract statute (p.2).

The operative line: "Kalshi is hereby ordered to immediately cease and desist advertising, offering, promoting, or otherwise making available Contracts or any other form of unlicensed online gambling to Connecticut residents" (p.2). The same paragraph says Kalshi "must, however, allow all Connecticut residents to withdraw any funds currently held by Kalshi", and warns of civil and criminal penalties (p.2). The attorney general's release says the department sent the same order to two other sites that month.

Kalshi sued the department, its commissioner Bryan T. Cafferelli, Gilman and Attorney General William Tong in federal court, KalshiEX LLC v. Cafferelli, No. 3:25-cv-02016, before Judge Vernon D. Oliver. The state held off enforcing while Kalshi's injunction request was pending (Dkt. 99, p.6).

On August 10, 2026, Judge Oliver denied the preliminary injunction (ECF 94). We have not read that opinion; his later order summarizes it. He held that Kalshi's sports-event contracts "do not constitute 'swaps'" under the Commodity Exchange Act and are outside the CFTC's jurisdiction, that federal law did not preempt Connecticut's authority over sports wagering, and that Kalshi failed all four injunction factors (Dkt. 99, p.2).

Kalshi then asked him to block enforcement while it appeals, pointing to the CFTC's August 11 order directing it to keep operating in New York. On August 15 he refused. He wrote that "the CFTC lacks the authority to dictate an order that conflicts with this Court's decision" (Dkt. 99, p.5), and that the CFTC order does not show the agency would act against Kalshi if it complied with state law (p.6). The order records Kalshi's own account that the state "declined to continue forbearing enforcement" after the August 10 ruling (p.5). It is in force; it denies Kalshi relief rather than ordering Kalshi to do anything.

Kalshi appealed to the Second Circuit (No. 26-2239). On August 19, 2026, Judge Sarah A. L. Merriam denied a temporary injunction while a panel considers the request, and referred Kalshi's motion for an injunction pending appeal to a three-judge panel "to be heard in tandem with" its motion in the New York appeal, KalshiEX LLC v. Williams, No. 26-1835. The court has calendared the New York motion for argument on November 3, 2026; we found no separate notice in the Connecticut appeal. Kalshi in New York follows that case.

Elsewhere the federal appeals courts have split, with the Third Circuit for Kalshi and the Sixth and Ninth against it at the preliminary stage, and the preemption question is in petitions at the Supreme Court; Kalshi at the Supreme Court follows them, and is Kalshi gambling? sets out both sides.

On August 26, 2026, Attorney General Tong filed a verified complaint in Hartford Superior Court, State of Connecticut v. KalshiEX LLC, at the commissioner's request (¶20, p.5). It alleges that Kalshi has offered sports wagers to Connecticut residents since January 2025 (¶2, p.2), "is not licensed by DCP, nor has it ever tried to become licensed" (¶5), and has marketed its contracts as "legal in all 50 states" (¶7, p.2). Its four counts (pp.17-21) are one for an injunction under the sports-wagering licensing statute, § 12-861(c), and three under the Unfair Trade Practices Act: illegal sports wagering, underage gambling, and deception.

It asks for temporary and permanent injunctions; disgorgement of Kalshi's revenue from the Connecticut sports business, or in the alternative the taxes and fees a licensee would have paid; restitution; civil penalties; and attorneys' fees (p.22). Kalshi moved the case to federal court the same day as No. 3:26-cv-01382, and the court has paused its deadlines until it decides whether to send the case back to state court. We found no ruling on that question or on the claims.

The federal government is on the other side of the same question. The United States and the CFTC sued Connecticut in federal court on April 2, 2026 (No. 26-cv-498, as Kalshi's filings cite it), and the attorney general says the state has moved to dismiss that suit.

The department's order says Kalshi must let Connecticut residents withdraw any funds it holds, and no order or filing we found limits withdrawals or open positions. The attorney general's requests for restitution and disgorgement are requests; no court has granted them. We could not determine whether Kalshi still offers sports contracts to Connecticut residents.

Connecticut's position is that Kalshi's sports contracts are sports wagering that needs a state license; Kalshi's is that they are swaps on a CFTC-designated exchange; and Judge Oliver found for the state at the preliminary stage. That decides who may license the contracts, not how a trader reports them. No filing in these cases addresses federal income tax, and the IRS has offered no guidance on event contracts.

Of the people we've seen file, three ways are the most common: treating the year as gambling income, capital gains reported on Form 8949, and the Section 1256 60/40 rule. How Realize rebuilds a Kalshi year from its fills under each is in how to file Kalshi taxes, and every other state's status is on the Kalshi legal page.