Prediction Markets
in Connecticut

The CFTC has sued Connecticut over the Polymarket cease-and-desist.

Connecticut is one of five states the CFTC is now suing in federal court to block state-level enforcement against CFTC-licensed event-contract platforms. The Connecticut Department of Consumer Protection issued the Polymarket cease-and-desist in December 2025; the CFTC's suit, filed April 2026, argues that the Commodity Exchange Act preempts state gaming enforcement against DCM-listed contracts. On May 5, the CFTC won an identical preemption ruling against Arizona, and is asking the District of Connecticut to apply the same three-prong framework here.

Connecticut is one of several states (alongside Arizona, Tennessee, Maryland, and Massachusetts) that have challenged the federal preemption argument for prediction markets. The legal question is whether the CFTC's designation of Kalshi (and QCEX) as Designated Contract Markets (DCMs) under the Commodity Exchange Act preempts state gaming and gambling laws.

Kalshi and Robinhood have not received similar enforcement actions in Connecticut: Kalshi's longer establishment as a CFTC-regulated entity and its active engagement with regulators have seemingly given it a different profile than Polymarket's rapid US expansion. Connecticut residents can currently use Kalshi, PredictIt, Manifold, and Robinhood prediction markets without restriction.

Kalshi issues a 1099-MISC for net annual profits. Report on your Connecticut state return (Form CT-1040) as ordinary income. Connecticut is a high-cost-of-living state with correspondingly higher marginal income tax rates. At the 6.99% top rate (combined with federal rates) high-income CT prediction market traders face some of the highest combined marginal rates in the country.