Connecticut Judge Likens Parlays to Casino Gaming in Ruling Against Kalshi

A federal judge in Connecticut has dealt another legal blow to Kalshi, ruling that the prediction market operator’s sports-event contracts do not qualify for an exemption from the state’s gambling laws. U.S. District Judge Vernon D. Oliver denied Kalshi’s motion for a preliminary injunction, comparing the company’s parlay-style contracts to wagers placed at a casino table.

The ruling adds Connecticut to a growing list of states pushing back against Kalshi’s argument that its sports markets function as legitimate financial instruments rather than sports betting products. Kalshi has already appealed the decision to the Second Circuit, seeking to overturn Oliver’s ruling and block Connecticut regulators from taking enforcement action against the platform.

Judge Draws a Direct Line Between Parlays and Casino Games

Central to Judge Oliver’s decision was his rejection of Kalshi’s claim that its sports contracts carry meaningful economic consequences that casino gaming does not. Kalshi had argued it would never list a contract on the outcome of a single blackjack hand because, in the company’s own words, “it would be very difficult to argue that that’s not gaming.”

Oliver found no principled distinction between that admission and a “combo” contract Kalshi does offer — for example, a wager on both the Giants and the Broncos winning in the same week. He noted that such an outcome “may have no independent financial, economic, or commercial consequence at all, apart from its significance to participants in Kalshi’s market and others who have wagered on that particular combination of outcomes.”

The judge went a step further, suggesting that casino table games could arguably make a stronger case for having real economic consequences than a sports parlay does, since a blackjack hand can carry financial weight for the house, the player, and others with a commercial stake in the game.

Ruling Rejects the CEA Preemption Argument

Beyond the casino gaming comparison, Oliver ruled that Kalshi’s sports-event contracts do not meet the definition of “swaps” under the Commodity Exchange Act (CEA). He added that even if the contracts were properly classified as swaps, Connecticut’s gambling statutes would still not be preempted by federal commodities law.

Oliver warned that accepting Kalshi’s broader logic — that any contract tied to a sporting outcome carries real-world economic consequences simply because people have money on the line — would sweep in “virtually any uncertain event with economic ramifications” as a swap, an outcome he said Congress never intended when it passed the Dodd-Frank Act amendments to the CEA in 2010.

Gaming attorney Daniel Wallach flagged an added wrinkle: Kalshi made a nearly identical “no independent economic consequence” argument in 2024 when defending its right to offer election-related contracts, at the time telling a court that a sports-event contract would be a classic example of prohibited “gaming.” Kalshi has since reversed that position as it built out its sportsbook-style products.

Parlays Have Become Kalshi’s Biggest Business

The stakes go well beyond legal semantics. Parlay-style contracts have overtaken single-game sports markets as Kalshi’s leading product line. Over the past seven days, users traded $3.2 billion on parlays compared to $3.07 billion on individual sports markets, with the combined categories now accounting for 77% of the platform’s total trading volume. That share is expected to climb once the NFL season begins next month.

A Mounting Legal Losing Streak

Connecticut is now the ninth state where courts or regulators have moved against Kalshi’s sports contracts. Utah became the eighth state just last week when a federal district court ruled it could enforce its own gambling laws against the platform. Nevada and Michigan have already restricted Kalshi’s operations, and unfavorable rulings have also piled up in New York, Maryland, Massachusetts, Ohio, and Washington.

Kalshi has notched a handful of wins as well, including favorable outcomes in New Jersey and Tennessee. A Minnesota judge also blocked the state from enforcing a law specifically targeting prediction markets, though that ruling left the door open for Minnesota to pursue separate action against Kalshi’s sports contracts down the road.

With appeals mounting on both sides, legal observers increasingly expect the underlying question — whether prediction-market sports contracts are permissible under federal commodities law or fall under state gambling jurisdiction — to eventually land before the Supreme Court. Until then, bettors weighing sportsbook promo codes at licensed operators may find those platforms offer more legal certainty than prediction markets currently operating in a patchwork of state-by-state disputes.

For now, the Connecticut ruling reinforces a theme playing out across the country: judges are increasingly unwilling to accept Kalshi’s framing of parlays and sports contracts as anything other than sports wagering, regardless of how the company packages the product.