Kalshi Denied Pause in Connecticut Appeal by Second Circuit

A single Second Circuit judge refused on August 19 to stop Connecticut enforcing its gambling laws against Kalshi while the company's appeal runs, and referred the injunction request to a three-judge panel that will hear it in tandem with Kalshi's New York appeal. The next day Kalshi and the Connecticut officials it is suing jointly asked the district court to freeze the case until 21 days after the appeal is decided.

The order is one page. It was issued as a certified copy on August 19, 2026 and entered on the Connecticut district court docket the following day. It is the Second Circuit's first move on the federal-preemption argument that a growing set of operators are using to argue their way past state gambling law: a question Judge Vernon D. Oliver called one "of first impression in the Second Circuit" four days earlier. That argument matters to anyone whose sweepstakes brand is edging toward event contracts.

What did the Second Circuit actually decide?

The order was heard by Circuit Judge Sarah A. L. Merriam sitting alone, at a term of the court held at the Thurgood Marshall United States Courthouse on Foley Square in Manhattan, and is signed out by the Clerk of Court, Catherine O'Hagan Wolfe. The operative paragraph reads:

IT IS HEREBY ORDERED that, to the extent Appellant moves for a temporary injunction pending review by a three-Judge panel, the motion is DENIED. The motion for an injunction is referred to a three-Judge panel, to be heard in tandem with Appellant's motion for an injunction in KalshiEX LLC v. Williams, No. 26-1835.

Three things follow from that, and only three. Kalshi gets no protection in the meantime. The wider request survives and goes to a full panel. And the Connecticut and New York motions will be heard in tandem by that panel, which is the genuinely new fact here. Tandem is not consolidation: the two appeals remain separate cases, argued to the same judges at the same sitting.

The order also sets the next date. Connecticut asked for leave to file a full opposition by August 24, 2026, and the court granted it, with Kalshi free to reply "in the ordinary course". That date has passed, and we cannot tell you whether the opposition was filed: the Second Circuit's own docket is not in the public mirror, nothing about it has reached the district court file, and the court has set no argument date on anything readable.

How did Kalshi's Connecticut case get here?

Fast, and downhill for Kalshi at every step.

The August 15 memorandum is worth reading for the standard it applied, because it explains why the appellate answer was never likely to be different in a week. An injunction pending appeal, Judge Oliver wrote, requires a "strong showing" of success on the merits, a burden that "demands a significantly higher justification than a request for a stay" and is "significantly higher than the ordinary standard for preliminary injunction". Kalshi had already failed the ordinary standard on August 10, when the court held its sports-event contracts are not "swaps" under the Commodity Exchange Act and that federal law does not displace Connecticut's authority. We covered the August 10 denial and what it held and the August 15 refusal to pause it when each landed.

Why are both sides now asking to stop the case?

On August 20 Kalshi and all four Connecticut defendants - Attorney General William Tong, Department of Consumer Protection Commissioner Bryan Cafferelli, Director of Gaming Kristofer Gilman and the department itself - filed a joint motion asking Judge Oliver to stay everything. Their reasoning is unusually blunt about how much rides on the appeal:

The issues in the Motion for Preliminary Injunction currently on appeal are identical to the merits of Kalshi's claim in this Court, i.e., whether state gambling law is preempted as applied to event contracts offered through Kalshi's platform.

They ask that proceedings, "specifically including discovery and pleading in response to Kalshi's Complaint", be stayed "until 21 days following the Second Circuit's decision on Kalshi's appeal". A Rule 26(f) report had been due on August 24, which has now passed, and Connecticut's response to the complaint on August 31.

Judge Oliver has since acted on that motion. An entry logged as an order on the motion to stay was made on the Kalshi docket on August 21, the day after the motion was filed and the same day he granted the parallel stay in the Coinbase case. It carries no entry number, no text and no document in the public mirror, so we can tell you the motion has been decided and not which way. Read it alongside the two dates in the paragraph above: if the stay was granted on the terms both sides asked for, neither of those deadlines is live.

Put plainly: the parties agree the district case is now a formality. The Second Circuit panel decides it.

What happened in the Coinbase and Novig cases on August 20?

The same move, on the same day. August 20 produced a stay filing on three further federal dockets in the same fight, all of them following a lost preliminary injunction and a notice of appeal:

The Massachusetts row carried a docket label and nothing else when this article published, and it is readable now. Entry 26 is a "Joint MOTION to Stay Proceedings and Stipulation of Voluntary Dismissal" filed by Ludlow Exchange, and on August 24 Judge F. Dennis Saylor IV granted it: the case is stayed until KalshiEX exhausts its state appellate rights over the Suffolk Superior Court preliminary injunction, and all claims against the six Massachusetts Gaming Commission officials are dismissed without prejudice, leaving Attorney General Andrea Joy Campbell as the only defendant. The order in full, including the answer deadline it sets, is in our piece on Novig's Massachusetts lawsuit being stayed until the Kalshi appeal.

The Michigan document became downloadable after we published and we read it on August 24. It is a five-page "Joint Motion for a Stay of Proceedings" in which Coinbase and all seven Michigan defendants - Attorney General Dana Nessel, the Michigan Gaming Control Board's board members and its executive director - "jointly move for a stay pending appeal of all further proceedings in this action". Their stated reason is the same economy argument the Connecticut parties made: a stay "would avoid unnecessary expenditure of judicial and party resources while the court of appeals considers the legal issues presented in this case". The appeal it waits on is Coinbase's Sixth Circuit case, Coinbase Financial Markets, Inc. v. Nessel, docketed by the court as No. 26-1693 and written 26-01693 in the motion itself. An order on that motion was entered at entry 62 on August 21; it carries no retrievable text, so we report that the court has acted and not how. Entry 99 is readable as a joint motion to stay filed on August 20 by counsel for the Connecticut defendants - Cafferelli, Gilman and Tong - with responses due September 10, and on August 21 Judge Oliver granted it at entry 100, staying the case "until 21 days after the Second Circuit's decision" and directing the clerk to administratively close it. So Coinbase's Connecticut case has stopped on the same terms the Kalshi parties asked for.

What is on the record around them is not ambiguous. Coinbase lost its Michigan preliminary injunction on August 6 before Judge Shalina D. Kumar and filed a notice of appeal to the Sixth Circuit the next day. It lost in Connecticut on August 10, appealed on August 14, and moved the same day for an emergency injunction pending appeal. Connecticut objected on August 17, and on August 18, seventeen days before the response deadline the clerk had set, Judge Oliver denied the motion at entry 98. That order was unnumbered and textless when this article first published and is readable now: 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". The order notes that Coinbase "adopts the arguments from Kalshi's Memorandum of Law", which is why it failed on the same reasoning Kalshi's did three days earlier.

Where does Novig's New York case stand?

Novig's exchange subsidiary, Ludlow Exchange, LLC, has five of these suits running, among them the three complaints it filed in one week against Massachusetts, Washington and New Mexico. Its New York docket moved on August 19, with five entries in a single day: a notice of appearance at entry 46, a request for leave to file excess pages at 47, a request for an extension of time at 48, an order granting leave to file excess pages at 49, and a response in opposition to a motion at 50. Not one of the five carries retrievable text or a downloadable document, so those labels are the whole of what we can tell you. We do not know who filed which, and with two separate requests logged that same day we will not guess which motion the opposition at entry 50 answers.

The schedule around them is readable. Judge Colleen McMahon denied Novig's restraining order on August 11 and set a briefing schedule; on August 12 she extended the Attorney General's time to oppose Novig's preliminary injunction from August 21 to September 10, and on August 14 she refused to merge the preliminary and permanent injunction motions. Oral argument on the preliminary injunction is set for September 11. Nothing on the docket has moved that date.

Novig matters here more than Kalshi or Coinbase do, because Novig came from this industry. It ran a sweepstakes sportsbook, and then it retired its Sweeps Coins and moved players onto a federally designated exchange. It has since lost its own emergency bid against New York. Same theory, same result so far.

What does this mean for sweepstakes players?

Nothing changes in your account today. No brand in our database has been ordered to do anything by any of this, and no state's rules moved this week.

What is being decided is whether the exit route works. Connecticut and New York have both closed the sweepstakes model by law, and the pitch behind an operator moving from Sweeps Coins to event contracts is that a federal commodities licence lets it keep serving states that have shut the door. Three federal judges rejected a version of that argument this month alone: Robert J. Shelby in Utah on August 4 and Shalina D. Kumar in Michigan on August 6, then Vernon D. Oliver in Connecticut on August 10. A King County judge reached the same conclusion in Washington state court, and Kalshi began blocking its Washington markets in August. It is not a clean sweep, and Judge Oliver says so himself: "courts have issued conflicting decisions nationwide," which is precisely why nobody can call the appeal.

So the honest position is that this is unresolved and, at district level this month, losing. What that means for you depends on which brand you hold a balance with, and the useful test is not what a company calls itself but what it has filed:

Legendz and Sportzino are the two sweeps sportsbooks we rank, and neither is a party to any of these cases. If your brand is in one of the first four rows, treat a "federally regulated" badge as a claim under appeal rather than a settled answer, and do not leave a redeemable balance sitting through it: our guide to cashing out Sweeps Coins sets out how long a withdrawal normally takes. Check where sweepstakes casinos are actually legal in your own state, or scan the state-by-state legality table, before you build a balance anywhere, and note that our ranked list of sweepstakes casinos is built on operators still running the Gold Coin and Sweeps Coin model.

Sources & documents

• Second Circuit order, certified copy entered August 19, 2026 - KalshiEX LLC v. Cafferelli, 2d Cir. No. 26-2239, the source of every quotation in the first two sections
• Joint motion and proposed order to stay, filed August 20, 2026 - five pages, the source of the stay quotations and the party list
• Memorandum and order denying an injunction pending appeal, August 15, 2026 - seven pages, the source of the "strong showing" standard
• Federal docket, KalshiEX LLC v. Cafferelli, No. 3:25-cv-02016 (D. Conn.)
• Federal docket, KalshiEX LLC v. Williams, No. 1:25-cv-08846 (S.D.N.Y.) - the New York appeal, USCA No. 26-1835
• Federal docket, Coinbase Financial Markets, Inc. v. Tong (D. Conn.)
• Federal docket, Coinbase Financial Markets, Inc. v. Nessel (E.D. Mich.)
• Joint motion for a stay of proceedings, filed August 20, 2026, E.D. Mich. 4:25-cv-14092, ECF 61 - five pages, downloaded and read on August 24, 2026, the source of the Michigan quotations
• Federal docket, Ludlow Exchange, LLC v. Campbell (D. Mass.)
• Federal docket, Ludlow Exchange, LLC v. James (S.D.N.Y.)

Every quotation above is verbatim from a document we downloaded and read: the Connecticut filings on August 21, 2026, the Michigan joint stay motion on August 24, and the Massachusetts stay order on August 25. The August 19 order reached us as the certified copy issued that day by the Court of Appeals and entered on the district court docket on August 20; the order carries no text layer and had to be decoded from its embedded font, so its two appellate docket numbers, 26-2239 for Connecticut and 26-1835 for New York, were each confirmed against a separate court record rather than taken from that document alone. Where this article reports a docket entry by its label - the orders entered on the Kalshi and Michigan stay motions on August 21, and the five August 19 entries in the New York Novig case - the public mirror holds no text and no document for it, and we describe nothing beyond the label and the date. Two entries have left that category since we published: the Michigan stay motion, read in full on August 24, 2026, and the Massachusetts stay filing of August 20, whose order was entered on August 24 and became readable on August 25. That mirror contains only what someone has pulled from the federal filing system, so "nothing further appears" means nothing further appears there. None of the companies named was asked to comment before publication, and nothing here alleges wrongdoing by any of them: these are their own filings and the courts' own orders.

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