Connecticut has taken action against several major trading platforms after finding that their sports-related markets crossed a legal line.
Summary
- Connecticut ordered Kalshi, Robinhood, and Crypto.com to stop offering unlicensed sports event contracts.
- Regulators say the platforms lack age checks, security standards, and consumer protections required in the state.
- Kalshi challenged the order in federal court, while Robinhood cited CFTC oversight and Crypto.com has yet to respond.
Connecticut moved to block several fast-growing prediction market platforms from offering sports-related contracts in the state, setting up the latest clash over where trading ends and gambling begins.
The action was announced on Dec. 3, 2025, in a cease-and-desist order released by the Connecticut Department of Consumer Protection.
State says platforms acted outside gaming rules
The department said Kalshi, Robinhood Derivatives, and Crypto.com have been offering “sports event contracts” that function like unlicensed sports wagers. According to the order, only DraftKings, FanDuel, and Fanatics are permitted to offer sports betting in Connecticut, and all three operate under rules designed to protect customers, verify age, and prevent insider activity.
In its announcement, the agency said the three platforms advertised their services as legal even though state law takes a different view. Officials warned that these markets expose users to financial and personal-data risks because they are not examined by regulators and do not follow the technical standards required of licensed operators.
The order also notes that some wagers involve events where the outcome may already be known by insiders, which Connecticut prohibits. Regulators also raised concerns about wagers offered to people under 21 and to those on the state’s Voluntary Self-Exclusion List.
All three companies were instructed to stop offering sports-linked contracts to residents and to allow customers to withdraw funds without delay. Continued activity could lead to penalties or criminal charges under the state’s gaming laws.
Companies respond as legal fight begins
Kalshi quickly pushed back. The company filed a lawsuit in federal court in Connecticut asking for an injunction. The filing argues that the state’s definition of gambling sweeps too widely and would treat every Kalshi market as illegal, even those already reviewed by the Commodity Futures Trading Commission. The company says states cannot override federal oversight of Designated Contract Markets.
Robinhood took a different approach, pointing to its CFTC-regulated structure. A spokesperson said its event contracts are offered through a registered entity and give users access to a supervised trading environment. Crypto.com has not issued a statement yet, though it recently paused similar markets in Nevada after a federal court ruling there.
The order makes Connecticut the latest state to challenge prediction platforms over sports-related contracts. Several other states, including New York and Massachusetts, have raised similar concerns, while recent federal rulings in Nevada and Montana have given the industry some momentum.
Connecticut’s move adds another legal front at a moment when prediction markets are gaining traction with both retail users and trading firms. With court cases building across the country, the outcome in Connecticut could influence how prediction markets operate in the years ahead.
For now, users in the state may need to wait for clarity as regulators and federal agencies continue to test the line between licensed betting and federally approved event trading.
