Key Takeaways
- Connecticut’s Department of Consumer Protection has issued Cease and Desist orders to Kalshi, Robinhood, and Crypto.com.
- The state is the tenth to take a stand against prediction markets.
- Robinhood and Crypto.com have become caught up in the dispute since they introduced event contract trading.
Connecticut is the latest state to accuse prediction market operators of violating gambling laws, issuing cease-and-desist orders to Kalshi, Robinhood, and Crypto.com.
To date, authorities in ten states and a string of tribal groups have launched or threatened legal action over the issue.
Prediction Market Gambling Dispute Escalates
At the heart of the dispute is a simple question with profound regulatory consequences: are event contracts financial instruments or bets?
Platforms frame prediction markets as a form of price discovery for real-world outcomes. However, state gambling authorities argue that in practice, event contracts are indistinguishable from wagers placed on traditional sportsbooks.
From the outset, platforms like Kalshi and Polymarket were dogged by questions over the legality of event contract trading, but tensions finally erupted this year.
The Ohio Casino Control Commission was the first to move in April. Since then, authorities in Illinois, Maryland, New Jersey, Arizona, Montana, Nevada, Massachusetts, and New York have entered the fray, with Connecticut’s Department of Consumer Protection emerging as the latest.
Native American tribes, which have privileged rights to operate gambling on their lands under federal law, have also moved to rein in prediction markets.
Kalshi has borne the brunt of tribal lawsuits in California and Wisconsin. It has also spearheaded the counterattack against state regulators, filing complaints in federal courts to block injunctions against it.
However, increasingly, crypto exchanges are also implicated in the conflict.
Robinhood and Crypto.com Implicated
While Kalshi and Polymarket initially popularized prediction markets, Crypto.com entered the space in December 2024. A few months later, Robinhood introduced its own version of the concept.
Both platforms partnered with Kalshi to offer event contracts. Meanwhile, major trading firms are getting involved as market makers.
The arrival of crypto exchanges brought a mainstream audience and a significantly larger potential user base to a previously niche and experimental territory.
As regulators have intensified the crackdown, Robinhood and Crypto.com have been caught up in the conflict. Alongside the Connecticut regulator, gambling commissions in Arizona, Maryland, Ohio, and Illinois have also targeted crypto exchanges, in addition to Kalshi.
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James Morales is CCN’s blockchain and crypto policy reporter. He has been working in the news media since 2020, writing about topics such as payments, banking and financial technology. These days, he likes to explore the latest blockchain innovations and the evolving landscape of global crypto regulation.
With an educational background in social anthropology and media studies, James uses his platform as a journalist to explore how new technologies work, why they matter and how they might shape our future.
