State regulators argue the platforms are offering unlicensed sports wagering, while Kalshi counters with a federal lawsuit
Connecticut regulators have issued cease and desist orders to Robinhood, Crypto.com and Kalshi, alleging the companies are running unlicensed online gambling operations through their prediction markets. The move escalates a widening regulatory battle across the United States as event-contract platforms attract record user activity and investment.
The Connecticut Department of Consumer Protection (DCP) said the firms were effectively offering sports wagering without a state license, claiming their event markets fall squarely under gambling laws. Commissioner Bryan Cafferelli stressed that none of the platforms are authorized to operate in Connecticut and that their services “violate numerous state laws and policies,” including offering wagers to individuals under 21.
DCP Gaming Director Kris Gilman criticized the firms for “deceptively advertising” their products as legal, arguing that users face heightened financial and privacy risks because the services lack mandated technical, security and integrity controls.
Kalshi Responds With Federal Court Challenge
Kalshi rejected Connecticut’s claimss, insisting it is a federally regulated exchange under the jurisdiction of the Commodity Futures Trading Commission. The company told reporters that its contracts differ fundamentally from state-regulated sports books.
In a federal complaint filed Wednesday, Kalshi argued that Connecticut’s action “intrudes upon the federal regulatory framework” governing derivatives markets and that its event contracts remain permissible under federal law.
Regulatory Pressure Spreads Across the US
Connecticut joins a growing list of states pressuring prediction marrkets. Kalshi has faced orders or lawsuits from New York, Massachusetts, Arizona, Illinois, Montana, Ohio, and ongoing litigation in New Jersey, Maryland and Nevada, reflecting intensifying scrutiny as the sector grows.
The DCP also warned that unlicensed platforms may allow insider participation, lack oversight of payout rules, and even permit wagers on events with known outcomes — risks not permitted under Connecticut’s regulated sportsbook framework, which includes only DraftKings, FanDuel and Fanatics.
As prediction markets surge in popularity, Connecticut’s enforccement move highlights an accelerating clash between state gambling laws and federally regulated event-contract exchanges.
Disclaimer
This content is for informational purposes only and does not constitute financial, investment, or legal advice. Cryptocurrency trading involves risk and may result in financial loss.