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The list of states where Kalshi is battling its legality has now grown longer, with Connecticut joining the group.
On Wednesday (Dec 3), the state’s Department of Consumer Protection Gaming Division moved against three platforms it accused of running unlicensed online gambling operations. The regulator issued formal cease and desist letters, targeting KalshiEX LLC, Robinhood Derivatives, LLC, and Crypto.com, and pointed directly to their sports wagering contracts as violations of state law.
“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, and even if they did, their contracts violate numerous other state laws and policies, including offering wagers to individuals under the age of 21.”
In addition to immediately ceasing all operations and promotions of sports event contracts in the state, the DCP is also ordering operators to allow Connecticut users to withdraw any funds currently held. Failure to comply could trigger civil penalties under the state’s Unfair Trade Practices Act or criminal charges under gaming statutes.
DCP highlights serious concerns with prediction markets
Connecticut regulators say the platforms ordered to leave are not required to meet the state’s technical standards for wagering systems, which exposes users to risks with both their money and personal information.
Unlike licensed operators, these companies do not have integrity safeguards in place. That gap allows insiders or participants to wager freely on events or even influence outcomes while regulated betting operators are required to block insider betting and track suspicious activity.
The state also points to the lack of oversight on house rules, which determine how wagers are settled. Because no regulator reviews these rules, payouts may not match what was promised, and if a dispute arises, the Department of Consumer Protection has no way to recover losses for consumers.
Concerns extend to advertising practices as well, with the DCP stating that these platforms promote their services on college campuses and to individuals on the Voluntary Self-Exclusion List, both of which are illegal in the state. They also allow wagers from people under 21, another violation of Connecticut’s rules.
“These platforms are deceptively advertising that their services are legal, but our laws are clear,” said DCP Gaming Director Kris Gilman. “They are also operating outside of a regulatory environment, posing a serious risk to consumers who may not realize wagers placed on these illegal platforms offer no protections for their money or information. A prediction market wager is not an investment.”
Kalshi sues Connecticut a day after C&D
Kalshi moved quickly after receiving Connecticut’s cease and desist order, filing a lawsuit the next day.
The company insists that its operations are not subject to state gambling laws, but instead fall under the Commodity Exchange Act. By its argument, the regulation of event contracts belongs solely to the Commodity Futures Trading Commission, leaving no room for states to intervene.
Is it an event contract or a sports event contract issue?
The position is not new, and like in Massachusetts, where Kalshi is also battling state regulators, it widened the debate by claiming that the state’s objections are going beyond sports contracts.
The operator argued that Massachusetts disapproved of every type of contract offered on its platform, yet enforcement only came when sports-related markets were introduced. Kalshi pointed out the wording of the state’s statute, which mentions both “sporting events” and “other events,” and said that Massachusetts was using this language to treat all prediction markets as sports betting.
However, Connecticut’s order appears to be more focused on sports betting, with the DCP describing Kalshi’s activity as unlicensed sports wagering through online event contracts. Still, in its filing, Kalshi stated,
“Setting aside Kalshi’s sports-event contracts, DCP’s cease-and-desist letter suggested that all of Kalshi’s event contracts are unlawful because Connecticut law ‘prohibits gambling,’ defined as ‘risking any money, credit, deposit or other thing of value for gain contingent in whole or in part upon lot, chance or the operation of a gambling device,’ and Kalshi’s actions do not ‘fall within any of the excepted activities to the prohibition on gambling.”
For now, Connecticut maintains that only three platforms, DraftKings, FanDuel, and Fanatics, are licensed to offer sports wagering in the state. Participation is restricted to those 21 and older, with fantasy contests allowed from age 18.
