- The Order: Connecticut’s DCP issued immediate cease-and-desist orders to Kalshi, Robinhood, and Crypto.com for operating unlicensed sportsbooks.
- The Charge: State regulators rejected the “Event Contract” classification, legally defining the products as “sports wagering” subject to state licensing.
- The Stakes: The move escalates a state-vs-federal turf war, challenging the CFTC’s authority to sanction prediction markets that mimic gambling.
The state of Connecticut in the United States has clamped down on Kalshi, Robinhood, and Crypto.com, ordering all three companies to cease betting operations within the region.
On Wednesday, December 3, the state’s Department of Consumer Protection Gaming Division issued a cease and desist order to the three platforms conducting unlicensed online gambling, specifically sports wagering, via official letters.
Related: Kalshi to Become CNN’s Official Prediction Market Partner With Real-Time Data Integration
Only Licensed Entities Can Offer Sports Betting Services
Speaking on the issue, DCP Commissioner Bryan T. Cafferelli stated that only licensed entities are allowed to offer sports wagering in the state of Connecticut. According to Cafferelli, none of the affected platforms possesses such licenses.
Besides not holding the required licenses, the firms violate numerous other state laws and policies, including offering wagers to individuals under the age of 21.
‘Deceptive’ Advertising Allegations
Still on the matter, DCP Gaming Director Kris Gilman noted that the affected platforms engaged in false advertising of their services, wrongly claiming that they fulfill the legal requirements to operate within the region.
Gilman further stated that the firms operate outside of a regulatory environment, posing a risk to consumers. According to him, such consumers may not realize that wagers placed on these illegal platforms offer no protection for their money or information.
Comply or Face Civil Penalties
Besides the cessation of operations, the regulators also ordered the affected companies to allow consumers to withdraw any funds currently held by them.
Failure to comply with the instructions may result in further disciplinary actions, including but not limited to civil penalties under the Connecticut Unfair Trade Practices Act and/or criminal penalties for violations of Connecticut’s gaming statutes.
The latest development highlights the mixed outcomes surrounding the prediction market amid adoption goals and challenges. Recently, Kalshi, which is a federally regulated exchange, announced a collaboration with CNN as the network’s official prediction partner.
Meanwhile, seven users of its prediction market app in New York have filed a proposed class action against the company, alleging that it operated unlicensed sports betting markets while presenting itself as a federally regulated exchange.
Related: Kalshi Faces Class Action Alleging Involvement In Unlicensed Sports Betting
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Source: https://coinedition.com/connecticut-regulators-order-kalshi-robinhood-and-crypto-com-to-halt-illegal-sports-betting/
