The gaming division of Connecticut’s Department of Consumer Protection has ordered Crypto.com, Kalshi and Robinhood to withdraw their unlicensed sports wagers from the market.
The Department of Consumer Protection (DCP) accuses the three prediction markets companies of violating state law by offering sports event contracts to people in Connecticut.
“Only licensed entities may offer sports wagering in the state of Connecticut,” says DCP Commissioner Bryan T. Cafferelli. “None of these entities possess a license to offer wagering in our state, and even if they did, their contracts violate numerous other state laws and policies, including offering wagers to individuals under the age of 21.”
The cease and desist letters from the DCP mark the latest action against sports event contracts and follow similar moves by gambling regulators and law enforcement authorities in states including Illinois, Maryland, Massachusetts, Michigan, Montana, Nevada, New Jersey, New York, Ohio, and Pennsylvania.
The DCP has order Crypto.com, Kalshi and Robinhood to immediately cease and desist advertising, offering, promoting, or otherwise making available sports event contracts or any other form of unlicensed online gambling to Connecticut residents.
“These platforms are deceptively advertising that their services are legal, but our laws are clear,” said DCP Gaming Director Kris Gilman. “They are also operating outside of a regulatory environment, posing a serious risk to consumers who may not realize wagers placed on these illegal platforms offer no protections for their money or information. A prediction market wager is not an investment.”
Connecticut has three licensed sports betting operators – DraftKings, FanDuel and Fanatics – all of which are now also involved in prediction markets, with Fanatics going live with its prediction markets offering yesterday.
These three companies only offer sports event contracts in states that do have legal sports betting.
Sports event contract providers argue that their contracts are swaps under the Commodity Exchange Act, meaning that they are governed by the Commodity Futures Trading Commission (CFTC) and not subject to state gambling laws.
In a ruling issued last week, the US District Court in Nevada sided with the state gambling regulator in its battle with Kalshi and Robinhood, stating in its ruling that the broad interpretation of swaps presented by Kalshi and Robinhood “would sweep nearly all sports wagering into the CFTC’s exclusive jurisdiction, even though the states historically have regulated gambling through their police power”.