Kalshi Faces New Connecticut Suit as Montana Case Reopens, Rivals Expand
Connecticut sues Kalshi over sports contracts, a Montana judge revives a stalled case, and rivals push into MLB deals and new U.S. markets.
This article was produced with AI assistance and edited by the ON360 newsroom.
Connecticut has filed a new enforcement lawsuit against Kalshi, seeking an injunction, civil penalties and disgorgement of revenue as the state escalates its fight over the company’s sports event contracts. The case, part of a wider legal battle playing out across several U.S. states, comes as a Montana judge separately revived a long-paused challenge to Kalshi’s operations there, according to Gambling Insider.
The developments landed in the same week federal authorities were reported to be examining additional possible insider trading involving prediction market contracts, and as rival platforms pushed further into sports partnerships and new U.S. markets.
Connecticut and Montana escalate
Connecticut alleges Kalshi is running an unlicensed sports wagering business and violating the state’s Unfair Trade Practices Act. Kalshi has already moved the case to federal court. A separate appeal at the Second Circuit, over whether federal law preempts Connecticut’s authority to regulate the company’s sports contracts, remains pending.
In Montana, U.S. District Judge Donald Molloy denied Kalshi’s request for a third stay in a case the company filed against the state in April, and also rejected its bid for a preliminary injunction. Molloy found the parties had shown no good cause for further delay, and that repeated pauses undercut Kalshi’s claim of irreparable harm. Montana now has 21 days to respond to the complaint. The denial was without prejudice, leaving Kalshi free to refile.
Novig, a smaller prediction market operator, has meanwhile paused two of its five state lawsuits. A federal judge stayed its Massachusetts case pending a ruling from that state’s Supreme Judicial Court on Kalshi’s own appeal. Novig and New Mexico regulators separately agreed to pause their dispute until August 2027, while a related CFTC lawsuit against the state proceeds.
Insider trading probes widen
Two existing federal insider trading cases tied to prediction markets also moved this week. Proceedings against a U.S. Army Special Forces soldier, Gannon Ken Van Dyke, have been stayed pending a parallel criminal prosecution. A Google engineer, Michele Spagnuolo, has asked a court to dismiss charges against him, arguing the contracts at issue amount to gambling rather than regulated commodity swaps.
Fresh reporting also pointed to two additional potential cases under review, involving a U.S. servicemember and a KPMG employee, though neither has been formally charged.
Expansion continues despite the legal noise
Kalshi signed marketing partnerships with five Major League Baseball teams, including the Los Angeles Dodgers, San Diego Padres and San Francisco Giants, building a footprint in California, where sports betting remains illegal but federally regulated event contracts are permitted.
Prospect Markets moved a step closer to a U.S. launch after its brokerage arm registered as an introducing broker with the CFTC and joined the National Futures Association. Customer funds and accounts will be handled by Crypto.com’s regulated exchange, with sports event contracts as an initial focus.
High Roller Technologies CEO Seth Young told Gambling Insider the company still expects to launch its ROLR prediction market platform before the end of 2026, with regulatory and technology work largely finished. ROLR is also registered as an introducing broker, using Crypto.com’s exchange infrastructure.
Novig, for its part, dropped American-style odds from its trading interface entirely, moving to percentage-based pricing. CEO Jacob Fortinsky said on social media the shift is meant to make the product look like “what it is: a financial market,” rather than a sportsbook.
Canadian regulators have so far kept sports and entertainment event contracts firmly separate from legal betting markets, leaving the state-by-state American fight as a case study rather than a live policy question north of the border. Ontario’s regulated operators continue to offer standard responsible-gambling tools such as deposit limits and self-exclusion for players who want them.
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