Key Highlights
- Connecticut cracks down on Robinhood, Kalshi, and Crypto.com over unlicensed sports betting, citing risks to users’ money and personal data.
- Prediction markets face rising U.S. legal scrutiny as platforms bypass licensing, lack safeguards, and allow unfair bets on known event outcomes.
- Polymarket’s U.S. relaunch signals growing competition in prediction markets despite legal pressures on unregulated sports contracts.
The state of Connecticut intensified its fight against unlicensed online gambling on Wednesday, issuing cease-and-desist orders to Robinhood, Kalshi, and Crypto.com. State regulators say the platforms’ “sports events contracts” operate illegally, warning that they lack the proper licensing to offer such services to residents.
DCP officials warned residents that these services lack safeguards, putting users’ money and personal information at risk. “Only licensed entities may offer sports wagering in the state of Connecticut,” said DCP Commissioner Bryan T. Cafferelli. “None of these entities possess a license to offer wagering in our state.”
The warning comes amid growing concerns over consumer protections and illegal gambling practices. According to DCP Gaming Director Kris Gilman, “These platforms are deceptively advertising that their services are legal, but our laws are clear.”
The state argues that these platforms operate outside regulatory frameworks, leaving users vulnerable to financial loss and data misuse. Prediction market wagers, unlike regulated investments, offer no safety guarantees.
Unregulated risks for consumers
The DCP cited numerous concerns related to the operations of these platforms. They do not adhere to Connecticut’s technical wagering minimum standards, placing personal and financial information at risk. In addition, these platforms do not provide integrity controls, creating the possibility that outcomes may be manipulated by insiders. Regulators require licensees to monitor for suspicious activity and prohibit insiders from betting, but unlicensed wagering services evade such protections.
Moreover, all the house rules about the settlement of wagers are not checked or verified, and there are no ways for users to get their money back in case of failure. Platforms also offer bets on events with known outcomes, such as award shows and professional team trades, which create conditions for unfair insider advantages.
Connecticut law strictly prohibits wagers on events where outcomes are already known. Furthermore, advertising to individuals on the Voluntary Self-Exclusion List or college campuses violates state rules, as does offering bets to underage users.
Expanding legal pressure across states
Connecticut’s directives reflect wider legal attention on the provider in the U.S. this year. In New York, Kalshi is facing a class-action lawsuit over illegal sports betting in the form of its “event contracts.” According to the plaintiffs, the platform violates state laws by rebranding wagers as financial instruments in a way that harms users across the country.
The case shows how contracts on Kalshi’s exchange are designed to function just like classic sports betting products-moneyline, point spread, over/under-while lacking state licenses or consumer protections.
Robinhood Derivatives LLC also took a dig at gaming officials in Nevada and New Jersey after offering sports-related contracts without regulatory approval. The firm cautioned of possible civil and criminal penalties because of noncompliance.
Meanwhile, crypto prediction platform Polymarket has re-launched its US app, offering sports prediction markets first, with expansion to politics, crypto, tech, and world events. The move is a signal of growing competition in the sector of prediction markets, which keeps attracting users and investors.
Connecticut’s move shows that prediction markets can sometimes act like illegal gambling. People using these platforms risk losing money and don’t have protections if things go wrong. The legal actions also show that regulators across the U.S. are paying closer attention to these services. These steps aim to make sure platforms follow the rules and keep users safe.
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