The decision by federal district judge Vernon D. Oliver was based on a threshold criterion, not a preemption rationale: for a contract to fall under the CFTC's exclusive jurisdiction, it must be a swap traded on a designated contract market. Oliver ruled that determining what constitutes a swap is a task for the judiciary, not the agency, rejecting Kalshi's argument that any such suit must be brought by the CFTC itself.
Regarding the statutory text, Oliver interpreted the phrase "the occurrence, non-occurrence, or extent of an event" as pertaining to whether an event happens and to what degree, not its outcomes. He agreed with the reasoning of the Nevada district court in a case brought by the Crypto.com-owned exchange, which found that dictionaries treat "event" as meaning "outcome" only in an archaic sense. A boxing match may occur, not occur, or last three rounds; who wins is an outcome of that event, not a separate event. Oliver explicitly declined to decide whether contracts on whether a game goes to overtime or a series goes to a seventh game would be viewed differently, as neither was before the court.
Oliver's second argument concerned the requirement that the event be related to potential financial, economic, or commercial consequences. In Oliver's view, this connection must be inherent to the event itself, not created by advertising contracts, bonus provisions, side bets, or other subsequent arrangements made by independent parties. A sporting event carries consequences related to ticket sales, broadcast rights, and advertising; who wins it does not. He also noted Kalshi's own admission in earlier DC Circuit litigation that match contracts likely serve no commercial or hedging interests.
Eighty to ninety percent of contracts listed on Kalshi's exchange were sports event contracts, accounting for a similar share of the company's revenue. The CFTC had subjected none of them to review under the special rule, let alone prohibited any. At a February hearing, Kalshi was valued at approximately $11 billion, with about 24,000 users in Connecticut.
Oliver did consider the issue of federal preemption and rejected it under both theories. The special rule in § 7a-2(c)(5)(C), allowing the CFTC to prohibit contracts related to gambling or activities unlawful under state law, reflects an intent to preserve state authority, not displace it. Federal fair access rules prohibit discriminatory access criteria; they do not require a DCM to offer contracts nationwide. Furthermore, the judge declined to read the Dodd-Frank Act as granting exclusive authority over sports betting to a financial regulator with no expertise in the area, noting that Congress has never appropriated funds to the CFTC for such purposes.
Kalshi also lost on the issue of irreparable harm. Its claimed losses were largely financial and substantially self-inflicted, given it continued listing contracts despite repeated warnings from regulators and adverse court rulings. Since Kalshi was already developing a geofencing system for other states, Oliver deemed it unlikely that ensuring compliance with Connecticut's requirements would entail significant additional cost. He noted Kalshi issued no warnings to users while marketing itself as the first app for legal sports betting in all 50 states.
The cryptocurrency question is addressed in a separate five-page order. Coinbase Financial Markets began offering Kalshi contracts via its platform in January 2026 as a futures commission merchant, not a designated contract market (DCM), and Connecticut had never taken any enforcement action against it. Oliver denied the motion "largely in accordance with" the Kalshi ruling and attached that conclusion as evidence. A December sweep in Connecticut also named Robinhood Derivatives and Crypto.com: DCP announced all three orders on December 3; gaming director Chris Gilman stated prediction market bets are not investments, and Commissioner Brian T. Cafferelli noted the platforms would violate other state laws even if licensed, including accepting wagers from individuals under 21.
Oliver's order lists 14 suits filed by Kalshi against states, with federal courts split and all state courts to have ruled thus far deciding against the company. He cited KalshiEX LLC v. Cox, decided in Utah on August 4, and went further than a Minnesota judge who stayed that state's ban, deeming a contract predicting the World Cup winner as likely a swap. State courts in Massachusetts, Nevada, and Michigan have issued geographic restriction orders; Kalshi pledged to implement one in Nevada by August 12, and faces the same deadline in Michigan.
A Kalshi spokesperson told Sports Betting Dime (a Sportradar subsidiary) that the company respectfully disagrees with the decision and is reviewing all legal options. Oliver ordered the parties to file a Rule 26(f) report by August 24, with Connecticut's answer to the complaint due by August 31.
