Yeliz Akmaca 
Connecticut decision to issue a cease and desist order against Kalshi, Robinhood and Crypto.com has once again pushed the fast-growing prediction market sector into national focus. The state argues that these platforms offered unlicensed sports betting through event contracts, sparking a wave of regulatory scrutiny across the United States.
Connecticut’s Cease Order and How the Dispute Began
The Connecticut Department of Consumer Protection sent formal notices to KalshiEX LLC, Robinhood Derivatives and Crypto.com, claiming they provided unlicensed sports wagering through sports event contracts accessible online. Regulators stated that only licensed operators are allowed to offer sports betting in the state, and noted that all three platforms allegedly violated multiple state laws. Officials also argued that some contracts could be accessed by individuals under 21, which created a significant consumer protection concern.
Commissioner Bryan T. Cafferelli emphasized that none of the platforms hold the necessary authorization to operate sports wagering services in Connecticut. Meanwhile, DCP Gaming Director Kris Gilman said that marketing prediction markets as investment tools was misleading, because these services lacked the technical safeguards required under state gambling rules. This dispute has deepened the nationwide debate around online betting oversight.
Company Responses and the Expanding CFTC Defense
Kalshi quickly challenged the order by filing a lawsuit in federal court. The company argued that it operates under exclusive federal jurisdiction as a CFTC-regulated derivatives exchange, and that its event contracts are lawful under federal law. Robinhood expressed a similar stance, noting that its contracts are offered through a CFTC-registered entity. Crypto.com, which previously paused its sports prediction offerings in Nevada after a separate regulatory dispute, did not issue an immediate public statement.
As regulatory pressure expands, Kalshi now faces actions from more than ten states, including New York, Massachusetts, Arizona and Ohio. This pattern highlights the rapid clash between emerging prediction platforms and state-level gambling frameworks.
Key Issues in Connecticut’s Unlicensed Betting Allegations
- Connecticut only licenses DraftKings, FanDuel and Fanatics for sports betting
- Event-based prediction contracts fall under the state’s sports wagering category
- Platforms allegedly expose users to financial and data security risks
- DCP requires companies to allow full withdrawal of Connecticut customer funds
What This Means for the Prediction Market Sector
The rise of prediction markets has generated massive user growth and increasing investor interest, yet it also challenges long-standing distinctions between derivatives, gaming and online wagering. Connecticut’s cease and desist action is now seen as a pivotal moment that could influence regulatory approaches across the country. With more states preparing similar enforcement steps, the sector may face a tougher regulatory landscape throughout 2025.
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