Connecticut’s Department of Consumer Protection has taken decisive action against three major platforms—Robinhood, Crypto.com, and Kalshi—by issuing cease-and-desist orders that prohibit them from offering sports event contracts to state residents. This announcement highlights the state’s firm stance on unlicensed online sports gambling, emphasizing the potential consequences of continued operations, including civil penalties and even criminal charges under existing gaming laws.
In the notice released on Wednesday, the Gaming Division of the department directed these platforms not only to cease their activities but also to enable local users to withdraw their funds. Department Commissioner Bryan T. Cafferelli stressed the importance of regulatory compliance, stating, “Only licensed entities may offer sports wagering in the state of Connecticut, and none of these entities possess a license to do so.” He further noted that even if they were licensed, the contracts offered by these platforms would still contravene numerous state laws and policies.
This regulatory action reflects a broader national debate regarding whether prediction markets should be classified under state gambling regulations or as financial derivatives subject to federal oversight. The inclusion of prominent financial services like Robinhood and Crypto.com alongside Kalshi in this enforcement action signals an increasing regulatory willingness to categorize app-based, outcome-based financial products as forms of sports betting.
A spokesperson for Kalshi defended the company’s operations, asserting that it functions as a regulated, nationwide exchange for real-world events and operates under federal jurisdiction. They emphasized the unique nature of their services, which they claim differ significantly from traditional state-regulated sportsbooks and casinos. Kalshi has previously initiated legal proceedings in federal court, seeking protection from state gambling laws.
Data indicates that a significant portion—approximately 74%—of the trades on Kalshi are related to sports markets, further highlighting its involvement in this contentious arena. The agency’s move comes at a time when various platforms are grappling with pressing questions regarding compliance with existing gambling laws and federal derivatives regulations.
Recent legal developments have also influenced the landscape. Just prior to Thanksgiving, a federal judge in Nevada ruled in favor of Kalshi, allowing it to continue operations while challenging the state’s gambling laws. Meanwhile, Crypto.com faced its own legal hurdles, with a U.S. federal court denying its request for a preliminary injunction and leading the company to suspend all sporting event market activities in Nevada as it sought an appeal.
Connecticut’s framework for online gambling has evolved significantly since the introduction of SB 146 in 2021, which laid the groundwork for online sports wagering and casino gaming under a tightly regulated licensing system. The legislation designated exclusive rights to only three entities: the Mashantucket Pequot Tribal Nation, the Mohegan Tribe, and the Connecticut Lottery Corporation. This regulatory framework was further solidified with the enactment of Public Act 21-23, which formalized tribal-state compacts to govern online gaming.
Following the enactment of these laws and the subsequent federal approvals, the Connecticut Department of Consumer Protection established detailed regulations in February 2022 to guide the state’s online gambling landscape. The recent cease-and-desist orders mark a significant step in ensuring compliance and safeguarding the integrity of the state’s gaming environment.
