Connecticut issues cease-and-desist to Kalshi, Robinhood, and Crypto.com over 'illegal sports wagering'

Connecticut's Department of Consumer Protection issued cease and desist orders to Kalshi, Robinhood, and Crypto.com, accusing them of conducting unlicensed online gambling, specifically in sports wagering.

The orders, issued Tuesday by the department's Gaming Division, target what regulators described as "sports event contracts" offered by the platforms, which they view as illegal sports wagering without a state license.

"Only licensed entities may offer sports wagering in the state of Connecticut," DCP Commissioner Bryan T. Cafferelli said in the statement. "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 letters require Kalshi, Robinhood and Crypto.com to immediately stop advertising, promoting, or providing the contracts to Connecticut residents. The platforms must also allow users in the state to withdraw any funds held in their accounts.

Regulators highlighted several risks posed by the unlicensed operations, including a lack of technical standards for protecting consumer data and no safeguards against insider betting on events with predictable outcomes — such as award shows or professional team trades. They also accused the platforms of unlawfully targeting college campuses and accepting wagers.

"These platforms are deceptively advertising that their services are legal, but our laws are clear," said DCP Gaming Director Kris Gilman. "They [pose] 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."

Non-compliance with the orders could result in civil penalties under the Connecticut Unfair Trade Practices Act or criminal charges under state gaming laws. The three companies did not immediately respond to requests for comment. 

Prediction markets have emerged as a new sector at the intersection of information and finance. While the Commodity Futures Trading Commission has given federal approval to leading platforms Kalshi and Polymarket, their status as legitimate derivatives platforms remains a major point of debate.

Kalshi has faced similar enforcement actions in other states this year, including Arizona, Illinois, Montana and Ohio. The company has previously argued that its event contracts fall under exclusive federal oversight and differ from traditional state-licensed sportsbooks.