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State of Play
- Connecticut gambling regulators have issued cease-and-desist orders to three major online prediction market platforms operating without state licenses.
- This enforcement highlights growing tensions between state regulatory authorities and federally regulated prediction markets.
- The move underscores ongoing challenges in ensuring consumer protection and regulatory compliance in evolving online gambling markets.
Connecticut’s Department of Consumer Protection’s Gaming Division has ordered Kalshi, Robinhood Derivatives, and Crypto.com to stop offering “sports event contracts” and other unlicensed online gambling to state residents.
These platforms operate “prediction markets,” allowing bets on events like sports games and elections, but lack state licenses required to legally offer sports wagering in Connecticut.
Commissioner Bryan T. Cafferelli emphasized the platforms violate multiple state laws, including marketing to underage bettors and failing to provide consumer protections for funds and personal data. The platforms must also allow residents to withdraw funds held by them. Failure to comply could result in civil and criminal penalties under state gaming and trade laws.
Sportsbooks turn focus to prediction markets
This enforcement means the three platforms must halt operations, protecting players from unregulated betting environments lacking safeguards like age restrictions and fair play assurances.
Licensed operators such as DraftKings, FanDuel, and Fanatics continue to offer regulated wagering within legal frameworks. Interestingly, all three are in the process of creating their own prediction markets.
In fact, Fanatics Markets launched last week in numerous states, including in Connecticut.
DraftKings and FanDuel recently severed ties with the American Gaming Association over their desire to operate prediction markets in the near future.
Action will probably result in a lawsuit
The regulators warn that these unlicensed platforms expose players to risks including insider betting and uncertain payout guarantees. Despite state laws, the offending companies claim federal regulation by the Commodity Futures Trading Commission, arguing their market-like model exempts them from state control.
This conflict illustrates ongoing jurisdictional challenges between state and federal oversight of online gambling activities and will probably result in a lawsuit being filed by one side or the other in Connecticut.
Similar legal actions in other states, like Massachusetts, indicate a broader trend toward stricter state enforcement against platforms operating under federal regulatory claims.
Based on reporting by Jesse Leavenworth for Journal Inquirer.
