CFTC Order Cannot Shield Kalshi, Connecticut Judge Rules

A federal judge held on August 15, 2026 that the CFTC's August 11 emergency order does not protect Kalshi from Connecticut's gambling laws, and refused to let the exchange keep trading while it appeals. Judge Vernon D. Oliver, in the first ruling on that order we can find, wrote that "as an administrative agency, the CFTC lacks the authority to dictate an order that conflicts with this Court's decision."

The seven-page memorandum and order went on the docket as entry 99 in KalshiEX LLC v. Cafferelli, 3:25-cv-02016 (D. Conn.). It carried no readable text in the public court mirror until this week, and we have found no coverage of what it says. We downloaded the signed PDF today and read it in full.

What did the Connecticut judge decide on August 15?

That Kalshi does not get to carry on trading in Connecticut while the Second Circuit considers its appeal. "For the foregoing reasons," the order ends, "Kalshi's Motion for an injunction pending appeal is DENIED. Kalshi has not presented any separate argument for its alternative request of administrative relief, and accordingly, that request is also DENIED."

The bar Kalshi had to clear was higher than the one it already failed on August 10, when the same judge denied it a preliminary injunction. An injunction pending appeal requires a "strong showing" of success on the merits, which the order says "demands a significantly higher justification than a request for a stay."

Kalshi did not clear it. Its first three arguments, the judge wrote, "are recycled from its PI Motion" - that the Second Circuit "may disagree" on whether its contracts are swaps, on express preemption, and on field preemption. His answer to all three is the line operators in every corner of this industry should read: "the possibility for reversal alone (a possibility that exists in every appeal) does not warrant the extraordinary measure of injunctive relief." Nor did the nationwide split help. "A split in caselaw outside of this Circuit does not justify injunctive relief pending appeal, nor does the sheer fact that this is an issue of first impression."

Does the CFTC's emergency order protect an operator from state law?

Not in this court, and this is the first ruling we have found that tests it.

On August 11 the Commodity Futures Trading Commission ordered Kalshi to keep its exchange running after New York sued. The operative sentence of that order, which we pulled from the CFTC's own PDF, is: "IT IS HEREBY ORDERED that, pursuant to Section 8a(9) of the CEA, the Commission having reason to believe that the threat to its market justifies the exercise of its statutory emergency power, Kalshi shall continue to perform its functions as an exchange in accordance with the CEA's Core Principles and its normal practices."

That order was Kalshi's fourth argument, and the only new one it had. It put the order in front of Judge Oliver as fresh evidence that federal and state law conflict. He described it as "declaring a 'market emergency' and directing Kalshi to operate its exchange in accordance with its normal practices, even if the state court orders Kalshi to stop operating in New York" - and then rejected it on three grounds.

There is also a change on the ground in the order, though it comes from Kalshi's own brief rather than from any finding by the court. Kalshi told the judge that Connecticut's officials, having "voluntarily refrained from taking enforcement action against Kalshi during the pendency of the PI Motion," "have declined to continue forbearing enforcement after the Court issued the PI Order." Both statements are footnoted to Kalshi's motion, and the judge neither disputes them nor adopts them as findings. He does turn them against Kalshi: the state's interest in enforcing its own law is a reason to refuse an injunction, not to grant one. Quoting Maryland v. King, he wrote that "any time a State is enjoined by a court from effectuating statutes enacted by representatives of its people, it suffers a form of irreparable injury."

Why should a sweepstakes player care about a prediction-market ruling?

Because the argument being demolished here is the argument several sweeps operators have adopted as their exit route from state bans.

Novig retired both of its sweepstakes currencies and relaunched through a CFTC-designated exchange, then sued five states in ten days on the theory that federal commodities law preempts their gambling statutes, ending with Wisconsin on August 14. It is not the only sweeps operator reaching for a federal registration: Fliff and Onyx Odds applied to become futures brokers on August 12, and the company behind ReBet has had the same kind of application pending since June 11. A Connecticut judge has now said that even a live federal agency order does not settle that question, and that a court decides what a statute means regardless.

The practical read for a player is narrower and harsher. A federal registration on an operator's homepage is not a guarantee that your state will leave the product alone, and it is not a guarantee your balance is safe. Sweepstakes casinos are not CFTC-registered at all, so they have less federal cover than Kalshi, not more. The two sweeps sportsbooks we rate, Legendz and Sportzino, sit outside this fight: neither had filed for a federal exchange or broker registration when we checked while covering Kalshi's Washington geofencing order. Connecticut banned sweepstakes casinos before any of this began, which is why our state page there carries no offers, and the state-by-state legality matrix is the page to check before you deposit anywhere.

What has happened in the Connecticut case since August 10?

Six dated steps, all of them on the two federal dockets:

1. August 10 - Judge Oliver denies Kalshi's preliminary injunction and, in a companion order, Coinbase's. Kalshi files its notice of appeal the same day at entry 95.
2. August 12 - Kalshi's appeal is docketed at the Second Circuit as No. 26-2239.
3. August 13 - Kalshi moves at entry 97 for an injunction pending appeal and, in the alternative, for short-term administrative relief.
4. August 14 - Connecticut objects at entry 98. Coinbase files its own notice of appeal at entry 94 and a "MOTION for Emergency Injunction Pending Appeal" at entry 95, with "Responses due by 9/4/2026."
5. August 15 - Judge Oliver denies Kalshi's motion at entry 99. That is the order this article reports.
6. August 17 - The clerk transmits Coinbase's record on appeal at entry 96, and Connecticut objects to Coinbase's emergency motion at entry 97, eighteen days before its deadline. Nothing further has surfaced in Kalshi's Second Circuit appeal.
7. August 18 - Judge Oliver denies Coinbase's motion for an emergency injunction pending appeal at entry 98, holding it "has not made a strong showing of success on the merits".
8. August 20 - Coinbase and the Connecticut defendants jointly move to stay the Coinbase case at entry 99.
9. August 21 - Judge Oliver grants that stay at entry 100 and directs the clerk to administratively close the Coinbase case until 21 days after the Second Circuit rules.

Where does the appeal go now?

To the Second Circuit, which has not yet been asked. Kalshi's appeal is docketed as KalshiEX LLC v. Cafferelli, No. 26-2239, opened August 12, 2026; nothing beyond the notice of appeal, the district court order and the docketing fee appears in the public mirror, so its promised motion for an injunction pending appeal has not surfaced there.

Coinbase, which lost a companion ruling from the same judge the same day, moved four days after Kalshi did. Its own emergency motion asked Judge Oliver for the relief he refused Kalshi on August 15, on the same reasoning he had already rejected twice. The September 4 response date on the docket was never a floor on when he could act: Connecticut answered Kalshi's equivalent motion within hours, and the order came two days after the motion was filed. It did not wait here either, objecting at entry 97 on August 17, and the judge did not wait for September 4. He denied the motion at entry 98 on August 18, seventeen days before the response deadline. The order, readable since, applies the standard he applied to Kalshi three days earlier: Coinbase "has not made a strong showing of success on the merits", and "irreparable harm and the remaining equitable factors weigh against issuing an injunction". It records that Coinbase "adopts the arguments from Kalshi's Memorandum of Law" wholesale, which is why the two motions failed on the same reasoning. Three days later the fight in that court stopped altogether: on August 20 both sides jointly moved to stay the case, and on August 21 Judge Oliver granted it at entry 100, staying the matter "until 21 days after the Second Circuit's decision" and directing the clerk to administratively close it. Coinbase is also already at the Sixth Circuit over Michigan, where the same preemption argument failed in front of a federal judge on August 6, as Coinbase Financial Markets, Inc. v. Dana Nessel, No. 26-1693, docketed August 10.

Our earlier piece on the August 10 Connecticut denials told readers we could not say which way the August 15 order went, because its text was unretrievable at the time. It is retrievable now, and that article has been corrected to say so.

Sources & documents

• KalshiEX LLC v. Cafferelli, Memorandum & Order, D. Conn. 3:25-cv-02016 (VDO), ECF 99 - seven pages, signed by Judge Vernon D. Oliver at Hartford on August 15, 2026. Every quotation attributed to the court above comes from this document
• CFTC, "Order Directing Kalshi to Continue Exercising DCM Functions," August 11, 2026 (PDF) - ten pages, issued by the Commission and signed by its Secretary, Christopher J. Kirkpatrick. Kalshi notified the CFTC of the claimed market emergency on August 1, 2026
• CFTC press release index, checked August 17, 2026: the Commission has published nothing on this matter since August 12
• Federal docket entries read through the CourtListener search API on August 17, 2026 and re-read on August 19, 2026, and readable by any reader on the docket pages themselves: Kalshi's Connecticut docket, Coinbase's Connecticut docket, Kalshi's Second Circuit appeal (No. 26-2239, docketed August 12, 2026) and Coinbase's Sixth Circuit appeal (No. 26-1693, docketed August 10, 2026)

The August 15 order was read in full from the signed PDF rather than from any report of it, and we have found no other coverage of it. Coinbase's entries 94 to 97 are not downloadable from the public mirror, so we report the docket's own entry titles and the response date it records rather than the contents of those filings. The August 18 order on Coinbase's motion, which carried no entry number, no description and no document when we first reported it, is now on the mirror in full as entry 98 and is quoted here from that text rather than inferred from a label; the August 20 stay motion at entry 99 and the August 21 order granting it at entry 100 are quoted the same way. We have still found no press coverage of any of the three. The mirror holds only what has been pulled from PACER, so "nothing further appears" means exactly that and not that nothing was filed. This article reports rulings on preliminary motions and makes no finding that anyone broke the law. Neither Kalshi, Coinbase nor the CFTC was asked for comment before publishing.

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