Connecticut has taken aim at three major platforms—Kalshi, Robinhood, and Crypto.com—ordering them to stop offering sports-related event contracts to residents. State regulators say the products amount to illegal online gambling, putting the companies on the wrong side of Connecticut’s wagering laws.
The Department of Consumer Protection issued formal cease-and-desist notices after finding that all three platforms were listing markets tied to the outcomes of sporting events without securing the approvals required for sportsbooks operating in the state. While companies like FanDuel, DraftKings, and Fanatics follow strict licensing rules, officials say these newer, derivatives-style platforms have been skirting the law.
State Flags Underage Access and Lack of Safeguards
Regulators pointed to several issues: users under 21 being able to access sports-linked contracts, the absence of integrity controls and technical standards required of licensed operators, and no clear systems to prevent insider participation. Officials emphasized that because these platforms are unlicensed, customers lack important protections — including what happens if funds are lost or disputes arise.
The state’s messaging is clear: if a platform offers something that looks and behaves like sports wagering, it must follow gambling rules, regardless of the company’s tech-driven branding.
Platforms Push Back, Citing Federal Oversight
Kalshi and Robinhood quickly disputed the state’s findings. Both argue that their event-based markets are not gambling products at all, but regulated derivatives overseen by the U.S. Commodity Futures Trading Commission (CFTC). The companies insist their contracts function as financial instruments, not wagers, and therefore should fall outside state gambling authority.
This clash highlights a growing divide: state regulators view sports-linked contracts as betting, while platforms blending finance, prediction markets, and digital assets argue they fall under federal market rules instead.
Growing Scrutiny for New Prediction Models
Crypto.com is also under pressure at the federal level. Earlier in 2025, the CFTC asked the exchange to pause trading of sports-related products, according to regulatory filings — a sign that even national regulators are still grappling with where to draw the line.
Connecticut’s move comes months after Governor Ned Lamont tightened gambling enforcement. Back in June 2024, the state banned offshore betting operator Bovada and issued a cease-and-desist order aimed at blocking unauthorized online wagering.
A Broader Fight Over the Future of Prediction Markets
The state’s latest actions send a strong message: digital-asset and prediction-market platforms offering sports-tied contracts will be treated as gambling operators unless they meet state requirements, regardless of their claims of federal regulation. As interest in prediction-style markets continues to grow, so does the tension between state gambling frameworks and the emerging CFTC-regulated derivatives platforms.
Connecticut’s crackdown could foreshadow similar battles across the U.S., as regulators try to keep up with fast-evolving financial-gambling hybrids that don’t fit neatly into existing rules.
Also Read: Ripple CEO Says Bitcoin Could Soar to $180K by 2026
