Connecticut Agrees to Delay Kalshi C&D Amid Legal Battle

Kalshi got a win in Connecticut this week, though it may be short-lived.

The Connecticut Department of Consumer Protection (CDCP) issued a cease-and-desist order to Kalshi last week, demanding that it remove its prediction market platform from the state. The operator responded quickly by filing a lawsuit against the regulator. 

The two sides met and signed a joint stipulation agreement, which included the regulators delaying the C&D for two months. It also included court dates to ensure the lawsuit can be resolved quickly.

Court Date Set for February

Fortunately for both sides, we will soon have a ruling on Kalshi’s lawsuit. 

Kalshi originally filed for a preliminary injunction on December 5, putting the ball in the CDCP’s court. The regulator has until January 9 to file a response, and Kalshi will have until January 30 to add additional information.

The two sides will meet in the courtroom on February 12 to begin a lawsuit that could have massive repercussions for the sports prediction industry.

CDCP Cites Lack of Problem Gambling, Fair Play Rules

The CDCP has several reasons for its argument that Kalshi’s sports prediction platform is a threat to residents. While there are several examples, two themes emerge from the regulator’s argument.

The first is the lack of problem gambling protocols. Kalshi doesn’t offer much support for those struggling, as industry regulations don’t require it. The operator also doesn’t need to comply with self-exclusion lists, which prevents sportsbooks from preying on those struggling with problem gambling. The list has been an essential tool for the sports betting industry, but it will be made useless if prediction operators refuse to comply.

The second theme concerns the lack of fair-play regulations. That means Kalshi is not required to pay out winnings as promised. It also means they don’t have to honor offers made in advertisements, such as bonus bets or other promotions.

Kalshi is not being accused of engaging in the above tactics, but the lack of laws preventing them means the risk will always remain.

Kalshi Claims Regulator Acting in Bad Faith

Kalshi publicly responded to the cease-and-desist letter in shock. The operator claimed it had been engaged in good-faith talks with the CDCP, with no indication that the regular was unhappy with their participation. They view the letter as a bad-faith attack, making them the victim of unfair discrimination.

Kalshi has built a reputation for exaggerating its arguments and showing a total unwillingness to change. However, Kalshi has found itself under constant fire from state regulators and tribal gaming groups. Their product remains legal and is seen as a massive threat to states with regulated sports betting markets. 

Kalshi believes this is the true motivation behind the attempts to regulate the industry, which it will once again argue before a judge.