Connecticut has ordered Kalshi, Robinhood, and Crypto.com to halt event-based contracts instantly, deepening its aggressive stance in opposition to digital property.
The choice exposes a widening regulatory rift between state playing legal guidelines and federal derivatives oversight.
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A New Flashpoint in Connecticut’s Anti-Crypto Marketing campaign
Connecticut has issued cease-and-desist orders to Kalshi, Robinhood Derivatives, and Crypto.com, accusing them of working unlicensed on-line sports activities betting by means of event-based prediction contracts.
The Division of Client Safety (DCP) claims the platforms violated state gaming legal guidelines and put shoppers in danger.
The transfer arrives 5 months after Governor Ned Lamont signed a invoice banning all state-level Bitcoin investments, cementing Connecticut as one of many least crypto-friendly jurisdictions within the US.
Whereas states like Texas, Arizona, and New Hampshire discover Bitcoin reserves and permissive digital-asset frameworks, Connecticut continues to tighten restrictions.
Why the State Says Prediction Markets Are “Illegal Sports Betting”
In its December 3 press launch, the DCP stated not one of the three platforms holds a license to supply wagering within the state.
“…their contracts violate numerous other state laws and policies, including offering wagers to individuals under the age of 21,” learn an excerpt within the press launch.
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Regulators accuse the platforms of:
- Promoting to individuals on the voluntary self-exclusion checklist
- Failing to implement integrity controls
- Permitting wagers on occasions with recognized outcomes
- Working outdoors any consumer-protection framework
- Deceptive customers into believing the markets are authorized investments
“A prediction market wager is not an investment,” stated DCP Gaming Director Kris Gilman.
In opposition to this backdrop, the DCP urges the platforms to stop all sports-event contracts and permit Connecticut residents to withdraw funds.
Whereas each Robinhood and Kalshi push again, citing federal oversight, solely the latter has filed a federal lawsuit difficult Connecticut’s authority.
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Nonetheless, this conflict highlights a rising authorized fault line between state playing legal guidelines and federal derivatives regulation.
“Unfortunate drama. The conflict between state gambling laws and federal derivatives oversight proves regulatory incoherence,” one person on X (Twitter) remarked.
A Multi-State Wave of Battles Is Forming
Connecticut isn’t alone. New York is embroiled in its personal authorized dispute with Kalshi. On the similar time, a current Nevada ruling asserted that state regulators might management sports-based occasion contracts, undermining the business’s argument for unique federal oversight.
On the similar time, the regulatory atmosphere is altering: Polymarket has gained CFTC approval and expanded to greater than 20 states, marking a stark distinction with Connecticut’s shutdown orders.
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What This Means for Crypto Markets and Prediction Platforms
The crackdown intensifies Connecticut’s divergence from nationwide crypto traits and heightens uncertainty across the authorized standing of event-based contracts.
With a number of states asserting authority, prediction markets face an advanced and fragmented US regulatory market.
Extra lawsuits are seemingly, and the result might decide whether or not prediction markets develop into federally supervised monetary merchandise or get handled as state-regulated playing.
The subsequent milestone can be Kalshi’s federal problem and whether or not extra states facet with Connecticut or observe the Polymarket-plus-CFTC mannequin.
