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Connecticut Escalates Prediction Market Enforcement Efforts, Prompting CFTC Response

Legal Writer

Publish Date: Sep 13, 2026

Fact checked by: Matt Moreno

Key Points

The Connecticut Department of Consumer Protection sent cease-and-desist demands to nine more exchange operators
Letters demand that platforms stop offering sports event contract trading in the state
CFTC filed request for preliminary injunction barring the enforcement in federal court

The Commodity Futures Trading Commission has asked the US District Court for the District of Connecticut to block efforts by state authorities to enforce Connecticut gambling laws against sports event contract trading ongoing in the state. The filing followed an announcement from Connecticut Gov. Ned Lamont's office that his administration sent more demands for prediction market exchange operators to stop providing that trading within Connecticut's borders.

Lamont's press release also denotes that the Connecticut Department of Consumer Protection has sent subpoenas for information to media outlets, payment processors, and service providers. Although Connecticut officials are taking one of the most aggressive stances against sports event contract trading, there are numerous scenarios in which that campaign could come to a halt.

Lamont announces new enforcement actions

A press release from Lamont's office states that "the Connecticut Department of Consumer Protection (CDCP) issued nine cease-and-desist orders to companies illegally operating prediction markets in the state." The statement clarifies that other "businesses that received subpoenas are not under investigation by the department but may possess information pertinent to the state’s investigation."

The nine exchanges that are now under cease-and-desist orders are:

Coinbase
Crypto.com
Gemini
Novig
Polymarket
ProphetX
Robinhood
Underdog Predict
Webull

The CDCP sent a similar demand to Kalshi in December 2025. That kicked off a series of litigation but this new announcement has escalated one of those disputes.

UNCASVILLE, CONNECTICUT - MARCH 09: Azzi Fudd #35 of the Connecticut Huskies plays against the Villanova Wildcats in the first half of the championship game of the Big East Women’s Basketball Tournament at Mohegan Sun on March 09, 2026 in Uncasville, Connecticut. (Photo by Joe Buglewicz/Getty Images)

CFTC asks federal court to intervene

The United States Commodity Futures Trading Commission (CFTC) submitted its request for the court to enjoin the CDCP and Lamont on Friday. This is a development in a lawsuit that the CFTC originally filed in April.

The CFTC has stuck to its standard argument that it is using in federal courts across the country to try to limit the actions of state law enforcement and regulators. The complaint states that Connecticut's attempts to apply its gambling laws to CFTC-registered exchanges violates the Supremacy Clause of the US Constitution.

The premise for the injunction relies not only on the court's acceptance of that argument but also that the CFTC would suffer irreparable harm and that the CFTC has shown that it has an acceptable chance of winning the case on its merits. The same court has already denied a similar request.

Kalshi has already failed to achieve the same end

Connecticut Attorney General William Tong sued Kalshi in August 2026 in state court. Kalshi was able to remove that dispute to federal court, but didn't get everything it wanted.

The district court denied Kalshi's request for a nearly identical preliminary injunction. That petition is now before the US Second Circuit Court of Appeals. In the denial, the district court found fault with the argument that Connecticut's enforcement of its gambling laws interferes with the CFTC's regulation of prediction markets.

The Second Circuit could reverse that decision at any time. That is just one of several possibilities that remain viable.

Multiple court decisions could impact Connecticut-prediction market dispute

The number of possible scenarios in multiple lawsuits remain dizzying at this time. They involve federal and state courts. They also involve all three levels of federal courts.

The district court in Connecticut is adjudicating five separate but related disputes.

Tong's lawsuit against Kalshi
Kalshi's lawsuit against Connecticut officials
Coinbase's lawsuit against Connecticut officials
Novig's lawsuit against Connecticut officials
The CFTC's lawsuit against Connecticut officials

The Second Circuit is considering Kalshi's appeal of the district court's injunction denial. It could become the sight of an appeal of the same court's decision on the CFTC's request for injunctive relief, too.

Additionally, the US Supreme Court has two petitions to review decisions related to injunctions involving other state governments before it. If Tong is able to remand his Kalshi lawsuit back to state court, Connecticut courts could get involved.

The possibilities are nearly endless right now. What's clear is that Connecticut officials are pulling their legal levers to curtail sports event contract trading in the state.

Want all the best insight into prediction market news? The Ballislife Play page is your source.

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