Cease-and-desist letters accuse the companies of conducting unlicensed gambling activity.
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The state Department of Consumer Protection’s Gaming Division has ordered three high-profile financial technology platforms to stop offering what regulators say are illegal online sports wagers in Connecticut.
Cease-and-desist letters were sent to KalshiEX LLC, Robinhood Derivatives LLC and Crypto.com, accusing them of conducting unlicensed gambling activity. Officials say all three companies have been marketing “sports event contracts,” which regulators contend are sports bets — not investments — and therefore require a license.
“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.”
Kris Gilman, DCP’s gaming director, said the companies are advertising that their services are legal but are operating outside a regulated environment that protects consumers.
“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,” Gilman said. “A prediction market wager is not an investment.”
Connecticut’s action comes amid growing national scrutiny of platforms that blur the line between trading and gambling.
Several states and federal regulators have raised concerns in recent months about prediction markets and event-based contracts that resemble sports bets or games of chance but operate outside traditional gaming rules. That debate includes questions about how these products should be regulated, what consumer protections apply and whether age restrictions are being enforced.
State officials say the platforms cited in Connecticut do not meet required technical standards for wagering systems, lack controls to prevent insider betting and do not have house rules reviewed by regulators.
They also allege the services have targeted people on the state’s self-exclusion list, advertised on college campuses and offered wagers to individuals under 21, all in violation of Connecticut law.
The companies are ordered to immediately stop advertising or offering sports event contracts to Connecticut residents and to allow state users to withdraw any funds being held. Violations could result in civil penalties under the Connecticut Unfair Trade Practices Act or criminal charges, DCP said.
Connecticut currently licenses three operators to offer online sports wagering: DraftKings (partnered with Foxwoods), FanDuel (Mohegan Sun) and Fanatics (Connecticut Lottery Corp.).
Participants must be at least 21 to wager on sports online or in person.
