The Connecticut Department of Consumer Protection has mandated Kalshi, Robinhood, and Crypto.com to cease offering prediction markets in the state.
This directive coincides with significant developments for the companies, as Kalshi has recently finished a funding round, elevating its valuation to $11 billion, and establishing a collaboration with CNN.
Connecticut Aligns with States Against Prediction Markets
In a statement released on Wednesday, the department insisted that the platforms comply with cease-and-desist orders and stop providing sports event contracts to Connecticut residents.
The department considers these markets as unregulated gambling, warning that non-compliance would lead to criminal penalties under state gaming and consumer protection statutes.
Prediction market operators have often argued they are not governed by local gambling laws, though regulatory resistance, notably in Nevada, remains persistent.
Some firms interested in prediction markets, such as Underdog, DraftKings, Fanatics, and FanDuel, have opted to leave sports betting sectors to focus on their prediction ventures.
The department, along with Commissioner Bryan T. Cafferelli, stated that any sports wagering service in the state must be licensed. This view is based on the belief that Kalshi and similar platforms are effectively offering a sports betting service, according to gaming regulators.
The CFTC vs. Gaming Laws and Regulations Debate
Nevertheless, the companies refute this. A Kalshi representative told Decrypt:
“As other courts have recognized, Kalshi is a regulated, nationwide exchange for real-world events, and it is subject to exclusive federal jurisdiction.”
A new lawsuit challenges this definition, accusing companies of using CFTC regulations as a guise to offer “illegal gambling products” under the pretense of a “financial service.”
This argument has been central to defending prediction markets. Despite opposition, firms like Kalshi are confident in overcoming challenges and proving they are financial services, thereby exempt from local gaming laws.
- SCCG Management. The Gambling Industry’s Global Connector. Access Here.
- Source: SCCGManagement.com