Connecticut has taken decisive legal action against three major prediction-market companies—Robinhood, Kalshi, and Crypto.com—issuing cease-and-desist orders for alleged unlicensed online gambling, specifically targeting sports wagering. The state’s Department of Consumer Protection (DCP) mandated that these companies immediately halt any advertising, promotion, or offering of contracts related to online gambling within Connecticut.
The state’s regulators asserted that none of these firms hold the necessary licenses to operate wagering services in Connecticut, emphasizing the danger posed by offering such services to underage individuals. Bryan T. Cafferelli, Commissioner of the DCP, pointed out that only three entities—Draft Kings, FanDuel, and Fanatics—are authorized to provide sports wagering in the state.
In response to the cease-and-desist order, Robinhood contended that it operates under federal regulation. A spokesperson highlighted that Robinhood’s event contracts fall under the purview of the Commodity Futures Trading Commission (CFTC), which supervises its offerings through Robinhood Derivatives, LLC. They emphasized that the platform enables retail customers to engage in prediction markets legally and safely.
Kalshi also rebutted the allegations, asserting its status as a regulated exchange subject to federal oversight. A spokesperson emphasized that their offerings are distinct from traditional state-regulated sportsbooks and casinos. Kalshi announced its intention to contest the state’s actions by filing a lawsuit in federal court, asserting that it is prepared to defend its legal position.
Crypto.com, on the other hand, has yet to publicly respond to the orders issued by Connecticut authorities.
This legal action echoes ongoing disputes in New York, where the state is embroiled in similar legal conflicts with Kalshi. That platform is currently pursuing litigation against New York over its regulatory stance, claiming that federal oversight by the CFTC should take precedence.
Additionally, a recent ruling in Nevada highlighted a potential jurisdictional challenge for similar platforms, indicating that state regulators may indeed have authority over some sports-based event contracts. This judgment could complicate Kalshi’s arguments in its federal appeal.
In the midst of these legal challenges, Polymarket, another player in the prediction market sphere, has expanded its services, launching an app in over 20 U.S. states while gearing up for an official relaunch.
Failure to comply with Connecticut’s cease-and-desist orders could subject these companies to significant civil or criminal penalties, marking a critical juncture for the landscape of online gambling and prediction markets in the state and beyond.
