Connecticut
regulators sent cease and desist letters to three prediction market platforms yesterday
(Wednesday), claiming Robinhood, Crypto.com, and Kalshi are running unlicensed
sports wagering operations that violate state law.
The
Connecticut Department of Consumer Protection’s Gaming Division told the
companies to immediately stop advertising and offering sports event contracts
to state residents. Regulators also ordered the platforms to let Connecticut
users withdraw their funds.
Bryan Cafferelli, commissioner of the state’s consumer protection department.
“Only
licensed entities may offer sports wagering in the state of Connecticut,” said
Bryan Cafferelli, commissioner of the state’s consumer protection department.
“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”.
Connecticut
joins a growing list of states pushing back against prediction markets. New
York sent Kalshi a cease and desist letter in late October, prompting
the company to sue the state on Oct. 27. Massachusetts filed suit against
Kalshi in state court in
September.
The
companies mentioned appear unfazed and continue to expand their offerings. An
example?
Crypto.com Moves Forward
With Fanatics Deal
On the same
day Connecticut issued its cease and desist order, Crypto.com announced the
launch of Fanatics Markets, a new prediction platform built through a
partnership with sports merchandise giant Fanatics. The platform went live
Wednesday in 10 states, with plans to expand to 24 states including California,
Texas, and Florida.
Travis McGhee
The timing
suggests Crypto.com remains undeterred by state-level regulatory challenges.
Travis McGhee, global head of predictions at Crypto.com, said the company was
“the first to launch sports prediction markets, and our reach continues to
grow through innovative partnerships with top-tier platforms such as
Fanatics”.
Fanatics
Markets allows users to trade contracts on sports, finance, economics, and
politics through Crypto.com’s CFTC-registered derivatives exchange . The
platform plans to add contracts for crypto, stocks, climate, pop culture,
technology, and entertainment in early 2025.
Kalshi Files Federal Lawsuit
Kalshi
responded to Connecticut’s order by filing a lawsuit in federal court on
Wednesday, arguing that the state is overstepping its authority. The company
says it operates under federal jurisdiction as a derivatives exchange regulated
by the Commodity Futures Trading Commission, not as a gambling operation
subject to state oversight.
“Connecticut’s
attempt to regulate Kalshi intrudes upon the federal regulatory framework that
Congress established for regulating derivatives on designated exchanges,”
the company said in its complaint. Kalshi added that its sports event contracts
are lawful under federal law and fall under the CFTC’s exclusive jurisdiction.
Robinhood
echoed similar arguments. A company spokesperson said the brokerage’s event
contracts are federally regulated by the CFTC and offered through Robinhood
Derivatives, a CFTC -registered entity.
State Raises Consumer
Protection Concerns
Kris
Gilman, Connecticut’s gaming director, said the platforms are misleading users
by claiming their services are legal. He warned that operating outside the
state’s regulatory framework leaves consumers without protections for their
money or personal information.
“They
are also operating outside of a regulatory environment, posing a serious risk
to consumers who may not realize wagers placed on these illegal platforms offer
no protections for their money or information,” Gilman said. “A
prediction market wager is not an investment”.
Connecticut
regulators listed several concerns, including the lack of technical security
standards for financial data, no integrity controls to prevent insider betting,
and unreviewed payout rules. The department also said these platforms allow
wagers on events with known outcomes, giving insiders unfair advantages, and
advertise to people on the state’s voluntary self-exclusion list.
Failure to
comply could lead to civil penalties under Connecticut’s Unfair Trade Practices
Act or criminal charges under the state’s gaming laws.
States vs Prediction Markets
Besides the
lawsuits mentioned earlier, Kalshi has also received cease-and-desist orders
this year from Arizona, Illinois, Montana, and Ohio. The
company is still facing litigation in New Jersey, Maryland, and Nevada.
Only three
platforms hold licenses to offer sports wagering in Connecticut: DraftKings,
FanDuel, and Fanatics. All three require users to be at least 21 years old.
📢 Today, DCP’s Gaming Division issued Cease and Desist orders to three platforms conducting unlicensed sports wagering.
Learn why Prediction Market Platforms offering “Sports Events” Contracts are illegal:https://t.co/LXLK1tRR0w
— Connecticut Department of Consumer Protection (@CTDCP) December 3, 2025
Despite the
regulatory pressure, Kalshi closed a $1 billion funding round this week at
an $11 billion valuation. The company saw record trading volume
of $4.54 billion in November.
Crypto.com
has been expanding its prediction market partnerships rapidly, recently signing
deals with Underdog, Truth Social, Hollywood.com, and MyPrize. The company’s
Derivatives North America division is registered with the CFTC as a designated
contract market and derivatives clearing organization.
Connecticut
regulators sent cease and desist letters to three prediction market platforms yesterday
(Wednesday), claiming Robinhood, Crypto.com, and Kalshi are running unlicensed
sports wagering operations that violate state law.
The
Connecticut Department of Consumer Protection’s Gaming Division told the
companies to immediately stop advertising and offering sports event contracts
to state residents. Regulators also ordered the platforms to let Connecticut
users withdraw their funds.
Bryan Cafferelli, commissioner of the state’s consumer protection department.
“Only
licensed entities may offer sports wagering in the state of Connecticut,” said
Bryan Cafferelli, commissioner of the state’s consumer protection department.
“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”.
Connecticut
joins a growing list of states pushing back against prediction markets. New
York sent Kalshi a cease and desist letter in late October, prompting
the company to sue the state on Oct. 27. Massachusetts filed suit against
Kalshi in state court in
September.
The
companies mentioned appear unfazed and continue to expand their offerings. An
example?
Crypto.com Moves Forward
With Fanatics Deal
On the same
day Connecticut issued its cease and desist order, Crypto.com announced the
launch of Fanatics Markets, a new prediction platform built through a
partnership with sports merchandise giant Fanatics. The platform went live
Wednesday in 10 states, with plans to expand to 24 states including California,
Texas, and Florida.
Travis McGhee
The timing
suggests Crypto.com remains undeterred by state-level regulatory challenges.
Travis McGhee, global head of predictions at Crypto.com, said the company was
“the first to launch sports prediction markets, and our reach continues to
grow through innovative partnerships with top-tier platforms such as
Fanatics”.
Fanatics
Markets allows users to trade contracts on sports, finance, economics, and
politics through Crypto.com’s CFTC-registered derivatives exchange . The
platform plans to add contracts for crypto, stocks, climate, pop culture,
technology, and entertainment in early 2025.
Kalshi Files Federal Lawsuit
Kalshi
responded to Connecticut’s order by filing a lawsuit in federal court on
Wednesday, arguing that the state is overstepping its authority. The company
says it operates under federal jurisdiction as a derivatives exchange regulated
by the Commodity Futures Trading Commission, not as a gambling operation
subject to state oversight.
“Connecticut’s
attempt to regulate Kalshi intrudes upon the federal regulatory framework that
Congress established for regulating derivatives on designated exchanges,”
the company said in its complaint. Kalshi added that its sports event contracts
are lawful under federal law and fall under the CFTC’s exclusive jurisdiction.
Robinhood
echoed similar arguments. A company spokesperson said the brokerage’s event
contracts are federally regulated by the CFTC and offered through Robinhood
Derivatives, a CFTC -registered entity.
State Raises Consumer
Protection Concerns
Kris
Gilman, Connecticut’s gaming director, said the platforms are misleading users
by claiming their services are legal. He warned that operating outside the
state’s regulatory framework leaves consumers without protections for their
money or personal information.
“They
are also operating outside of a regulatory environment, posing a serious risk
to consumers who may not realize wagers placed on these illegal platforms offer
no protections for their money or information,” Gilman said. “A
prediction market wager is not an investment”.
Connecticut
regulators listed several concerns, including the lack of technical security
standards for financial data, no integrity controls to prevent insider betting,
and unreviewed payout rules. The department also said these platforms allow
wagers on events with known outcomes, giving insiders unfair advantages, and
advertise to people on the state’s voluntary self-exclusion list.
Failure to
comply could lead to civil penalties under Connecticut’s Unfair Trade Practices
Act or criminal charges under the state’s gaming laws.
States vs Prediction Markets
Besides the
lawsuits mentioned earlier, Kalshi has also received cease-and-desist orders
this year from Arizona, Illinois, Montana, and Ohio. The
company is still facing litigation in New Jersey, Maryland, and Nevada.
Only three
platforms hold licenses to offer sports wagering in Connecticut: DraftKings,
FanDuel, and Fanatics. All three require users to be at least 21 years old.
📢 Today, DCP’s Gaming Division issued Cease and Desist orders to three platforms conducting unlicensed sports wagering.
Learn why Prediction Market Platforms offering “Sports Events” Contracts are illegal:https://t.co/LXLK1tRR0w
— Connecticut Department of Consumer Protection (@CTDCP) December 3, 2025
Despite the
regulatory pressure, Kalshi closed a $1 billion funding round this week at
an $11 billion valuation. The company saw record trading volume
of $4.54 billion in November.
Crypto.com
has been expanding its prediction market partnerships rapidly, recently signing
deals with Underdog, Truth Social, Hollywood.com, and MyPrize. The company’s
Derivatives North America division is registered with the CFTC as a designated
contract market and derivatives clearing organization.
