Connecticut has initiated a legal challenge against sports event contracts by issuing a series of cease-and-desist orders on Wednesday to major prediction-market operators, including Robinhood, Kalshi, and Crypto.com.
The Department of Consumer Protection in the state alleges that these companies are “conducting unlicensed online gambling, specifically sports wagering.” The notices state that each company must “immediately cease and desist from advertising, offering, promoting, or otherwise making available Contracts or any other form of unlicensed online gambling to Connecticut residents.”
Robinhood responded on Wednesday, asserting their operations fall under federal regulation.
“As previously mentioned, Robinhood’s event contracts are overseen by the CFTC and provided through Robinhood Derivatives, LLC, a registered entity, enabling retail customers to engage in prediction markets safely and compliantly,” a Robinhood representative said in an email.
The other two companies have yet to comment on the issued letters.
“None of these entities hold a valid license for offering wagering in our state, and even if they did, their contracts breach several other state regulations, including provisions against offering wagers to individuals under 21,” stated Connecticut DCP Commissioner Bryan T. Cafferelli, who noted that only Draft Kings (accessible through Foxwoods), FanDuel (at Mohegan Sun), and Fanatics (Connecticut Lottery) have eligibility for sports wagering in the state.
The state also warned that noncompliance could lead to civil or criminal repercussions.
To the south, New York is embroiled in a legal dispute with Kalshi over similar issues, with Kalshi responding by suing the state regarding its stance. Both Kalshi and Crypto.com are regulated by the federal Commodity Futures Trading Commission designated as contract markets (DCMs). Kalshi contends, in its New York legal battle, that the state lacks the authority to interfere with federal oversight.
Recently, a federal judge in Nevada established that state regulators possess jurisdiction over certain sports-based event contracts, which could challenge the industry’s stance on the matter. Kalshi, the company implicated in that ruling, plans to appeal the decision.
Polymarket, the leading provider of crypto-native prediction markets, launched an app across over 20 U.S. states on Wednesday, gearing up for a more extensive official reentry into the U.S. market.
