The Connecticut Department of Consumer Protection has ordered Robinhood, Crypto.com, and prediction market operator Kalshi to stop offering sports event contracts in the state. The move escalates a broader clash over whether these products qualify as regulated investments or unlicensed gambling.
Connecticut Orders Platforms to Halt Sports-Based Contracts
On Wednesday, the state’s Gaming Division issued cease-and-desist letters instructing all three platforms to immediately halt advertising, offering, and providing “sports event contracts” or any other form of unlicensed online gambling to Connecticut residents.
Regulators state that only a small group of licensed operators, including DraftKings, FanDuel, and Fanatics, may offer sports wagering in Connecticut under a framework that includes age checks and consumer safeguards.
Officials argue that the products marketed as event or prediction contracts effectively function as sports bets because residents stake money on the outcomes of professional games and related events. The orders also require the firms to allow Connecticut users to withdraw any funds held on the platforms, with potential civil or criminal penalties if the concerned companies do not comply.
Regulators Cite Compliance Failures and Gambling Risks
Connecticut regulators cite multiple concerns, including alleged failures to meet state standards for age verification, the exclusion of self-banned gamblers, and controls over insider-sensitive markets such as awards or player transactions.
The department warns that customers using unlicensed platforms lack the protections built into state-regulated sportsbooks, including transparent dispute processes and oversight of payout rules.
Robinhood maintains that its event contracts are subject to federal oversight by the Commodity Futures Trading Commission (CFTC), framing them as derivative products rather than gambling. Kalshi has responded by filing a lawsuit in federal court seeking to block enforcement of the Connecticut order, arguing that its exchange operates under exclusive federal jurisdiction, while Crypto.com has not yet publicly detailed its position.
The Connecticut action adds to mounting state-level scrutiny of sports-based event contracts, following earlier enforcement steps in states such as Nevada. Legal disputes around Kalshi and similar platforms have become test cases for how far states can go in treating federally regulated event-contract venues as sports betting businesses.
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