The state of Connecticut launched a legal broadside against sporting event contracts with a trio of cease-and-desist orders sent Wednesday to major prediction market operations: Robinhood, Kalshi and Crypto.com.
The state Department of Consumer Protection accused the companies of “conducting unlicensed online gambling, more specifically sports betting.” Each of the companies is hereby ordered “to immediately cease and desist from advertising, offering, promoting or making available contracts or any other form of unlicensed online gaming to residents of Connecticut,” according to the state notices.
Robinhood argued Wednesday that it is regulated by the federal government.
“As we have previously shared, Robinhood event contracts are federally regulated by the CFTC and are 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 said in an emailed statement.
The other two companies did not immediately respond to requests for comment on the letters.
“None of these entities have a license to offer betting in our state, and even if they do, their contracts violate many other state laws and policies, including offering betting to persons under the age of 21,” Connecticut DCP Commissioner Bryan T. Cafferelli said in a statement, which identified three companies with eligibility to offer sports betting in the state: Draft Kings (through Foxwoods), FanDuel (Mohegan Sun) and Fanatics (Connecticut Lottery).
The state said failure to comply could result in civil or criminal penalties.
Just south of Connecticut, the state of New York is also in a legal dispute with Kalshi over the same issue, and the crypto platform is suing the state for its position. Kalshi and Crypto.com are regulated by the Federal Commodity Futures Trading Commission as designated contract markets (DCM). Kalshi has argued in his legal challenge in New York that the state has no right to interfere with that federal oversight.
Last month, a federal judge ruled in Nevada that state regulators have jurisdiction over some of that state’s sporting event contracts, potentially threatening the industry’s argument on this point. Kalshi, which was the company involved in that case, was to appeal.
Polymarket, the largest crypto-native prediction market provider, launched an app in more than 20 US states, also on Wednesday, as it prepares for a broader official relaunch in the US.
