The Connecticut Department of Consumer Protection (DCP) recently issued cease-and-desist orders to three major platforms—Crypto.com, Kalshi, and Robinhood—demanding they cease offering and advertising sports event contracts in the state. This action, announced on December 2, 2025, places Connecticut alongside other states that have already moved to regulate prediction markets, with some using similar measures to combat what they view as unlicensed sports betting.

According to Bryan T. Cafferelli, Commissioner of the DCP, “Only licensed entities may offer sports wagering in the state of Connecticut.” As reported by InGame, he emphasized that these platforms lack the necessary state licenses to operate legally in the state. Even if they did hold such licenses, the DCP pointed out that their contracts violate numerous other state regulations, such as the legal age for wagering, which in Connecticut is set at 21 for sports betting but only 18 for prediction markets.

Kalshi’s Lawsuit and Defenses

In response to the DCP’s cease-and-desist order, Kalshi, one of the targeted platforms, immediately filed a lawsuit against the state in Connecticut District Court. The company seeks an injunction to block the enforcement of the cease-and-desist letters. Kalshi’s legal team asserts that the Commodity Exchange Act (CEA) supersedes state gaming laws, placing regulation of its contracts solely under the authority of the Commodity Futures Trading Commission (CFTC). Kalshi argues that its sports event contracts are not subject to state-level gambling rules, but are instead considered swaps under federal law, which, according to the company, should exempt them from state regulation.

Kalshi’s lawsuit mirrors its earlier legal battle in Massachusetts, where the company similarly contested the application of state gambling laws to its contracts. The company claims that Connecticut’s actions could lead to a broader interpretation of gambling statutes, potentially sweeping much of their platform into state gambling regulations, which could impact not only sports contracts but other types of event contracts as well.

The DCP’s concern extends beyond licensing and age restrictions. The agency also stated that prediction market platforms such as Kalshi, Robinhood, and Crypto.com are not required to comply with Connecticut’s standards for wagering platforms. These include integrity controls, consumer protection measures, and house rules. The platforms have also been accused of advertising to individuals on Connecticut’s voluntary self-exclusion list, as well as on college campuses—both actions that are prohibited by state law. Furthermore, the DCP raised the risk of insider trading, pointing to the potential for unfair advantage when consumers are able to trade on event contracts based on privileged or non-public information.

Kris Gilman, the DCP Gaming Director, warned, “These platforms are deceptively advertising that their services are legal, but our laws are clear. 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.” This highlights the growing tension between state-regulated sports betting platforms and federal-level regulation of prediction markets, raising concerns about consumer safety in an increasingly complex gambling landscape.

Expansion of Prediction Markets and Future Implications

The crackdown in Connecticut comes as other states, such as New York and Massachusetts, have also challenged the legality of prediction markets. Connecticut now joins a growing list of states that have taken similar actions, including Illinois, Maryland, and New Jersey. The DCP’s actions against Kalshi, Crypto.com, and Robinhood are seen as part of a larger trend to control the rapidly expanding market for sports event contracts, which blur the lines between traditional sports betting and financial swaps.

At the same time, established sports betting operators in Connecticut—such as DraftKings, FanDuel, and Fanatics Sportsbook—have begun to branch into prediction markets, providing sports event contracts in states where these offerings are legal. While these operators remain compliant with state laws, the question of how new prediction markets will coexist with state-regulated sports betting remains unsettled, particularly in states like Connecticut, which have clear rules governing legal gambling operations.