Connecticut Cracks Down: Robinhood, Kalshi, and Crypto.com Face Cease and Desist for Alleged Illegal Online Gambling
In a significant regulatory move, the State of Connecticut has issued cease and desist orders against three prominent prediction market operators: Robinhood, Kalshi, and Crypto.com. The state accuses these platforms of illegally operating online gambling businesses within its borders and has demanded an immediate halt to their sports event contract offerings.
The Connecticut Department of Consumer Protection (DCP) emphatically stated that the companies are “allegedly engaged in unlicensed online gambling activities, specifically sports betting.” This decisive action underscores Connecticut’s commitment to enforcing its stringent gambling regulations and protecting consumers.
Immediate Halt Mandated, Penalties Loom
According to the state’s official notification, Robinhood, Kalshi, and Crypto.com must immediately cease all promotion, offering, and facilitation of any form of contract trading or unlicensed online gambling activities to Connecticut residents. Non-compliance could lead to severe civil and even criminal penalties, signaling a serious legal challenge for the platforms involved.
Bryan T. Cafferelli, Commissioner of the Connecticut Department of Consumer Protection, minced no words regarding the state’s position: “None of these entities are licensed to provide gambling services in Connecticut. Even if they were, their contracts violate numerous other Connecticut laws and policies, including offering betting services to individuals under the age of 21.” This statement highlights both the fundamental licensing issue and broader policy concerns regarding consumer protection and age restrictions.
Exclusive List of Licensed Operators in Connecticut
The DCP further clarified that only three operators currently hold valid licenses to conduct sports betting in Connecticut: DraftKings (operating through Foxwoods Resort Casino), FanDuel (partnered with Mohegan Sun), and Fanatics (in conjunction with the Connecticut Lottery). This limited list emphasizes the state’s tightly controlled gambling market.
Robinhood Invokes Federal Oversight in Defense
In response to the state’s allegations, online brokerage giant Robinhood swiftly mounted a defense, invoking federal oversight. A Robinhood spokesperson stated, “As we have consistently maintained, Robinhood’s Event Contracts are strictly regulated by the federal Commodity Futures Trading Commission (CFTC) and are offered through our registered entity, Robinhood Derivatives. This allows retail investors to participate in prediction markets within a secure and compliant environment.”
Robinhood’s argument positions its offerings as legitimate derivative financial products, subject to federal commodities law, rather than the “gambling” characterized by the Connecticut government. This sets up a potential jurisdictional conflict between state and federal regulatory frameworks. As of the time of this report, Kalshi and Crypto.com have not issued formal responses to the cease and desist orders.
Disclaimer: This article is intended solely to provide market information. All content and opinions are for reference only and do not constitute investment advice. They do not represent the views and positions of the author or the platform. Investors should make their own decisions and transactions. The author and the platform will not be held responsible for any direct or indirect losses incurred by investors’ transactions.
