Connecticut Cracks Down On Unlicensed Event Betting By Major Platforms

• Connecticut targets firms over unlicensed sports-event wagering.
• State orders immediate halt to event-based betting services
• Robinhood and Kalshi cite federal CFTC regulatory oversight
• Dispute highlights widening clash over state versus federal authority

Connecticut regulators intensified scrutiny of event-driven betting markets by issuing cease-and-desist orders to Robinhood, Kalshi, and Crypto.com. The state’s Department of Consumer Protection said the firms operated unlicensed online sports wagering by offering or promoting event-based contracts to residents. Officials directed the companies to cease all services related to these products immediately.

The enforcement move marks a significant escalation in the state’s stance toward prediction markets, which have expanded rapidly as more platforms explore contracts tied to real-world outcomes. Regulators stressed that the disputed products fall squarely within the definition of sports wagering under Connecticut law and therefore require proper state licensing before being made available to the public.

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Platforms Defend Operations Under Federal Oversight Claims

Robinhood and Kalshi pushed back against the orders. Both firms argued that their event-based markets fall under exclusive federal jurisdiction because they operate through entities regulated by the U.S. Commodity Futures Trading Commission. They said the contracts function as federally supervised derivatives rather than state-regulated gambling products.

Kalshi again expressed that it remains committed to the fact that it provides market services that constitute a national exchange for real-world events as governed by CFTC regulations. Kalshi stated that there are fundamental differences between their products and the traditional sports wagering products.

This assertion was echoed by Robinhood, which claimed that it offered event contracts through a CFTC-regulated subsidiary. Crypto.com failed to provide an immediate response to the notifications from Connecticut. The state warned each of the three companies that failure to comply could result in civil and criminal liability for violating the current gaming laws.

New York Expands Legal Battle With Kalshi

Connecticut’s action adds new complexity to an already developing national debate. Neighboring New York is engaged in its own legal conflict with Kalshi regarding the same type of contracts, and the company has challenged the state’s stance in federal court.  Information indicates that both Kalshi and Crypto.com are approved contract markets by the CFTC, and therefore, are above state regulation.

A recent federal ruling in Nevada complicated the matter further by affirming some authority for state regulators over sports-related event contracts. This case involved the company, Kalshi, which now intends to appeal the ruling. This situation indicates that there is an increasing regulatory rift between the federal and state levels.

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