The state of Connecticut took legal action against sporting event contracts on Wednesday with three termination orders sent to major prediction-market operations — Robinhood, Kalushi and Crypto.com.
The state consumer protection department accused the companies of “unlicensed online gambling, especially sports betting.” According to the state’s notice, each company is ordered to “immediately cease and desist from advertising, offering, promoting, or otherwise contracting or engaging in any other form of unlicensed online gambling to Connecticut residents.”
Robinhood argued Wednesday that it is regulated by the federal government.
“As we have previously shared, Robinhood’s event contracts are federally regulated by the CFTC and are offered through Robinhood Derivatives, LLC, a CFTC-registered entity, allowing retail clients to access prediction markets in a secure, compliant and regulated manner,” a spokesperson for Robinhood said in an emailed statement.
The other two companies did not immediately respond to requests for comment on the letters.
“None of these entities are licensed to conduct wagering in our state, and even if they did, their contracts violate numerous other state laws and policies, including those offering wagering to individuals under the age of 21,” Connecticut DCP Commissioner Brian T. Cafarelli said in a statement.
The state said failure to comply could result in civil or criminal penalties.
Just south of Connecticut, New York state is also in a legal dispute with Kalshi over the same issue, and the crypto platform is suing the state over its position. Kalshi and Crypto.com are regulated by the federal Commodity Futures Trading Commission as a Designated Contract Market (DCM). Kalshi has argued in his New York legal challenge that the state has no right to interfere with that federal oversight.
Last month, a federal judge ruled in Nevada that state regulators have jurisdiction over some of the state’s sports-based event contracts, potentially jeopardizing the industry’s argument on this point. Kalshi, which was the company involved in that case, was prepared to appeal.
PolyMarket, the largest crypto-native prediction markets provider, launched an app in more than 20 US states – also on Wednesday – as it prepares for a wider official relaunch in the US.