Connecticut Set to Halt Kalshi, Crypto.com, and Robinhood Bets

• Connecticut claims Kalshi, Robinhood, and Crypto.com ran unlicensed sports event wagering.
• States widen actions as federal–state disputes intensify over prediction market legality.
• Crypto platforms’ involvement and tribal suits add pressure as multi-state scrutiny grows.

Connecticut issued cease-and-desist orders against Kalshi, Robinhood, and Crypto.com, accusing them of running unlicensed online sports betting through event-based contracts. The Department of Consumer Protection said the companies violated state wagering laws and exposed residents to unregulated services. The action targeted platforms involved in prediction markets that state officials classified as illegal sports wagering.

State Targets Event Contracts as Illegal Wagering

Officials said the three firms offered sports-related event contracts to Connecticut users without the required licenses. However, the state also claimed the contracts crossed several legal lines, including offering wagers to users under 21. DCP Commissioner Bryan Cafferelli named DraftKings, FanDuel, and Fanatics as the only operators legally permitted to run sports wagering programs in the state.

The notices instructed Kalshi, Robinhood, and Crypto.com to stop advertising and offering any event contracts to residents. They also warned that violation of the orders could bring civil or criminal penalties. 

However, the companies defended their operations by pointing to federal approvals. Robinhood said its event contracts operate under the oversight of the Commodity Futures Trading Commission through its Robinhood Derivatives unit. The company said the setup provides a regulated environment for users who access the platform’s prediction markets.

Kalshi delivered a similar response and argued that the state’s order conflicts with federal law. The platform said the CFTC holds exclusive authority over its exchange, which lists contracts on real-world events. According to Kalshi spokesperson Jack Such, federal jurisdiction separates its markets from traditional sportsbooks that fall under state control.

Federal Oversight Cited as Tension Deepens

The conflict gained momentum when Connecticut said the platforms misled consumers by presenting the contracts as legal investment tools. DCP Gaming Director Kris Gilman said users faced significant risk because the platforms did not operate within state consumer-protection rules. 

He added that unlicensed operators provide no safeguards for funds or personal data. This concern was built on similar actions taken in other states. New York issued its own cease-and-desist order against Kalshi in late October. 

Massachusetts sued the platform in September, while Arizona, Maryland, Ohio, Illinois, and Montana raised objections through their gaming agencies. These moves suggested a growing national trend as states reassessed prediction market products.

However, Kalshi responded by filing lawsuits in federal court to block state restrictions. The company argued that Connecticut intruded on the federal framework governing designated contract markets. Kalshi said its sports event contracts remain lawful because they fall under the CFTC’s domain, not state gambling law.

A recent Nevada ruling added new pressure when a judge concluded that state regulators may have authority over certain sports-based contracts. This ruling complicated the industry’s argument that all event contracts fall exclusively under federal review. Kalshi planned to appeal that decision, yet the judgment created another challenge for the prediction market sector.

Related: Polymarket Prodigy Turns $12 Into $30K With Unbroken BTC Precision

Multi-State Pressure Extends to Crypto Platforms

Crypto platforms have recently pushed into event-contract markets as well, widening the scope of regulatory scrutiny. Crypto.com launched its product in 2024, while Robinhood followed shortly after. Both rely on Kalshi for contract listings, drawing them into the same regulatory challenges now emerging across multiple states.

This broader involvement also attracted scrutiny from tribal governments. Tribes in California and Wisconsin brought legal action against Kalshi, citing their own sovereign rights over gambling activity. 

Polymarket, another major operator, expanded into more than 20 states after gaining CFTC approval. This is in contrast to Connecticut’s restrictions and shows the inconsistent regulatory sector prediction markets now face.

Connecticut’s cease-and-desist orders against Kalshi, Robinhood, and Crypto.com show widening tension between federal oversight and state gambling laws. The move adds to a growing list of multi-state actions challenging event-based contracts. This dispute now influences the future of prediction markets as regulators and platforms continue to contest authority.