Connecticut regulators sent cease and desist letters to three prediction market platforms yesterday (Wednesday), claiming Robinhood, Crypto.com, and Kalshi are running unlicensed sports wagering operations that violate state law.

Connecticut Orders Prediction Platforms to Halt Operations

The Connecticut Department of Consumer Protection's Gaming Division told the companies to immediately stop advertising and offering sports event contracts to state residents. Regulators also ordered the platforms to let Connecticut users withdraw their funds.

"Only licensed entities may offer sports wagering in the state of Connecticut," said Bryan Cafferelli, commissioner of the state's consumer protection department.

"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".

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Connecticut joins a growing list of states pushing back against prediction markets. New York sent Kalshi a cease and desist letter in late October, prompting the company to sue the state on Oct. 27. Massachusetts filed suit against Kalshi in state court in September.

The companies mentioned appear unfazed and continue to expand their offerings. An example?

Crypto.com Moves Forward With Fanatics Deal

On the same day Connecticut issued its cease and desist order, Crypto.com announced the launch of Fanatics Markets, a new prediction platform built through a partnership with sports merchandise giant Fanatics. The platform went live Wednesday in 10 states, with plans to expand to 24 states including California, Texas, and Florida.

The timing suggests Crypto.com remains undeterred by state-level regulatory challenges. Travis McGhee, global head of predictions at Crypto.com, said the company was "the first to launch sports prediction markets, and our reach continues to grow through innovative partnerships with top-tier platforms such as Fanatics".

Fanatics Markets allows users to trade contracts on sports, finance, economics, and politics through Crypto.com's CFTC-registered derivatives exchange Exchange An exchange is known as a marketplace that supports the trading of derivatives, commodities, securities, and other financial instruments.Generally, an exchange is accessible through a digital platform or sometimes at a tangible address where investors organize to perform trading. Among the chief responsibilities of an exchange would be to uphold honest and fair-trading practices. These are instrumental in making sure that the distribution of supported security rates on that exchange are effectiv An exchange is known as a marketplace that supports the trading of derivatives, commodities, securities, and other financial instruments.Generally, an exchange is accessible through a digital platform or sometimes at a tangible address where investors organize to perform trading. Among the chief responsibilities of an exchange would be to uphold honest and fair-trading practices. These are instrumental in making sure that the distribution of supported security rates on that exchange are effectiv Read this Term. The platform plans to add contracts for crypto, stocks, climate, pop culture, technology, and entertainment in early 2025.

Kalshi Files Federal Lawsuit

Kalshi responded to Connecticut's order by filing a lawsuit in federal court on Wednesday, arguing that the state is overstepping its authority. The company says it operates under federal jurisdiction as a derivatives exchange regulated by the Commodity Futures Trading Commission, not as a gambling operation subject to state oversight.

"Connecticut's attempt to regulate Kalshi intrudes upon the federal regulatory framework that Congress established for regulating derivatives on designated exchanges," the company said in its complaint. Kalshi added that its sports event contracts are lawful under federal law and fall under the CFTC's exclusive jurisdiction.

Robinhood echoed similar arguments. A company spokesperson said the brokerage's event contracts are federally regulated by the CFTC and offered through Robinhood Derivatives, a CFTC CFTC The 1974 Commodity Exchange Act (CEA) in the United States created the Commodity Futures Trading Commission (CFTC). The Commission protects and regulates market activities against manipulation, fraud, and abuse trade practices and promotes fairness in futures contracts. The CEA also included the Sad-Johnson Agreement, which defined the authority and responsibilities for the monitoring of financial contracts between the Commodity Futures Trading Commission and the Securities and Exchange Commiss The 1974 Commodity Exchange Act (CEA) in the United States created the Commodity Futures Trading Commission (CFTC). The Commission protects and regulates market activities against manipulation, fraud, and abuse trade practices and promotes fairness in futures contracts. The CEA also included the Sad-Johnson Agreement, which defined the authority and responsibilities for the monitoring of financial contracts between the Commodity Futures Trading Commission and the Securities and Exchange Commiss Read this Term-registered entity.

State Raises Consumer Protection Concerns

Kris Gilman, Connecticut's gaming director, said the platforms are misleading users by claiming their services are legal. He warned that operating outside the state's regulatory framework leaves consumers without protections for their money or personal information.

"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," Gilman said. "A prediction market wager is not an investment".

Connecticut regulators listed several concerns, including the lack of technical security standards for financial data, no integrity controls to prevent insider betting, and unreviewed payout rules. The department also said these platforms allow wagers on events with known outcomes, giving insiders unfair advantages, and advertise to people on the state's voluntary self-exclusion list.

Failure to comply could lead to civil penalties under Connecticut's Unfair Trade Practices Act or criminal charges under the state's gaming laws.

States vs Prediction Markets

Besides the lawsuits mentioned earlier, Kalshi has also received cease-and-desist orders this year from Arizona, Illinois, Montana, and Ohio. The company is still facing litigation in New Jersey, Maryland, and Nevada.

Only three platforms hold licenses to offer sports wagering in Connecticut: DraftKings, FanDuel, and Fanatics. All three require users to be at least 21 years old.

📢 Today, DCP's Gaming Division issued Cease and Desist orders to three platforms conducting unlicensed sports wagering.

Learn why Prediction Market Platforms offering "Sports Events" Contracts are illegal:https://t.co/LXLK1tRR0w

— Connecticut Department of Consumer Protection (@CTDCP) December 3, 2025

Despite the regulatory pressure, Kalshi closed a $1 billion funding round this week at an $11 billion valuation. The company saw record trading volume of $4.54 billion in November.

Crypto.com has been expanding its prediction market partnerships rapidly, recently signing deals with Underdog, Truth Social, Hollywood.com, and MyPrize. The company's Derivatives North America division is registered with the CFTC as a designated contract market and derivatives clearing organization.