Connecticut regulators have issued cease-and-desist orders to Kalshi, Robinhood, and Crypto.com, accusing the platforms of offering illegal sports-linked event contracts to state residents. The move underscores a growing conflict between state gambling laws and federally regulated prediction-style markets.
State Declares Event Contracts as Illegal Online Gambling
The Connecticut Department of Consumer Protection (DCP) ruled that the companies’ sports-related event markets constitute unlicensed online gambling, not regulated financial products. The DCP said the firms violated state wagering laws by offering contracts tied to sports outcomes without approval as licensed sportsbooks.
According to state filings, regulators flagged several concerns:
- Products were accessible to users under age 21
- Platforms failed to meet state integrity, security, and technical standards
- No consumer protections existed to prevent insider wagering or resolve disputes
Officials warned that unlicensed platforms leave users vulnerable, with no formal avenues for recourse if funds are lost or disputes occur.
Platforms Argue Their Products Are Federally Regulated Derivatives
Kalshi and Robinhood strongly disputed Connecticut’s position, arguing that their event contracts fall under the supervision of the Commodity Futures Trading Commission (CFTC), not state gambling authorities.
They maintain that these markets are financial derivatives, not wagers. The companies say they are operating legally within a federal regulatory framework that differs from the model used by traditional sportsbooks.
Crypto.com, which received a similar order, previously paused trading of sports-linked products at the request of the CFTC earlier in 2025.
A Growing Clash Between State Gambling Rules and Prediction Markets
The enforcement action highlights a rising regulatory tension:
State gambling regulators want to apply wagering laws to prediction markets, while platforms insist they operate in the digital asset and derivatives ecosystem.
Meanwhile, fully licensed sportsbooks like FanDuel, DraftKings, and Fanatics already operate in Connecticut under strict compliance standards. Prediction and event-based markets, however, do not fit neatly into existing oversight categories—leading to inconsistent interpretations across jurisdictions.
Part of a Larger Crackdown on Gambling and Digital Wagering
Connecticut’s action follows a legislative push to strengthen gambling oversight. Governor Ned Lamont signed new laws five months ago aimed at curbing unauthorized betting platforms.
In 2024, the state banned offshore gambling site Bovada, issuing a cease-and-desist order.
The latest actions signal that Connecticut intends to enforce state gambling laws regardless of platforms’ claims to federal CFTC jurisdiction, escalating a national debate over how prediction markets and crypto-linked event contracts should be regulated.
