Connecticut regulators have taken action against Robinhood, Crypto.com, and prediction market platform Kalshi, accusing them of offering unlicensed sports gambling through event contracts.
On Wednesday, the state’s Department of Consumer Protection (DCP) issued cease-and-desist letters to the three companies, directing them to stop providing sports-related contracts to residents and ensure users can withdraw their funds safely.
“None of these entities possess a license to offer wagering in our state, and even if they did, their contracts violate numerous other state laws and policies, including offering wagers to individuals under the age of 21,” said DCP Commissioner Bryan Cafferelli.
The agency also flagged risks to consumers, citing platforms’ lack of security controls, oversight of payout rules, and safeguards against insider betting or manipulation.
Kris Gilman, DCP Gaming Director, added that the platforms “deceptively advertise that their services are legal” while operating outside state regulations. Only DraftKings, FanDuel, and Fanatics hold sports wagering licenses in Connecticut, all of which enforce age limits and regulatory compliance.
📢 Today, DCP's Gaming Division issued Cease and Desist orders to three platforms conducting unlicensed sports wagering.
— Connecticut Department of Consumer Protection (@CTDCP) December 3, 2025
Learn why Prediction Market Platforms offering "Sports Events" Contracts are illegal:https://t.co/LXLK1tRR0w
Connecticut Department of Consumer Protection Official Notice
Kalshi pushes back in federal court
Kalshi has contested the state’s order, asserting that it operates as a federally regulated derivatives exchange under Commodity Futures Trading Commission (CFTC) oversight.
“Connecticut’s attempt to regulate Kalshi intrudes upon the federal regulatory framework that Congress established for regulating derivatives on designated exchanges.”
Robinhood emphasized that its event contracts are offered through Robinhood Derivatives, LLC, a CFTC-registered entity, providing retail investors with a regulated avenue to participate in prediction markets. Crypto.com did not respond to requests for comment.
“As we’ve previously shared, Robinhood’s event contracts are federally regulated by the CFTC and offered through Robinhood Derivatives, LLC, a CFTC-registered entity, allowing retail customers to access prediction markets in a safe, compliant, and regulated manner,” a Robinhood spokesperson mentioned.
A growing national regulatory focus
Connecticut is not alone in targeting prediction markets. Kalshi has faced similar actions in at least nine other states, including New York, Massachusetts, Arizona, Illinois, Montana, Ohio, New Jersey, Maryland, and Nevada. In each case, the company has defended itself by pointing to federal oversight, highlighting an ongoing national debate about whether such platforms should be treated as gambling products under state law or as derivatives governed federally.
Despite regulatory headwinds, Kalshi recently closed a $1 billion funding round at an $11 billion valuation, following its strongest monthly trading volume in November.
The company reports that around 74% of its contracts are sports-related, illustrating why state gaming regulators have focused scrutiny on these platforms.
Regulatory clarity and market evolution
Polymarket’s recent CFTC approval provides a contrasting example of how prediction markets can operate under full federal oversight. After building a compliant infrastructure, including market supervision, custody, and reporting systems, the platform was allowed to onboard brokerages and retail customers directly, bridging crypto-native markets with traditional financial frameworks.
Shayne Coplan, Polymarket’s founder, described the milestone as a “clarity where there is confusion and accountability where there is ambiguity,” underscoring how compliance can enable broader adoption while protecting users.
In contrast, Connecticut’s cease-and-desist orders against Kalshi, Robinhood, and Crypto.com highlight the risks that arise when platforms operate without similar regulatory safeguards.
Oleksii Shumak
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