Connecticut has ordered Kalshi, Robinhood, and Crypto.com to halt event-based contracts instantly, deepening its aggressive stance in opposition to digital property.
The choice exposes a widening regulatory rift between state playing legal guidelines and federal derivatives oversight.
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A New Flashpoint in Connecticut’s Anti-Crypto Marketing campaign
Connecticut has issued cease-and-desist orders to Kalshi, Robinhood Derivatives, and Crypto.com, accusing them of operating unlicensed on-line sports activities betting via event-based prediction contracts.
The Division of Client Safety (DCP) claims the platforms violated state gaming legal guidelines and put customers in danger.
The transfer arrives 5 months after Governor Ned Lamont signed a invoice banning all state-level Bitcoin investments, cementing Connecticut as one of many least crypto-friendly jurisdictions within the US.
Whereas states like Texas, Arizona, and New Hampshire discover Bitcoin reserves and permissive digital-asset frameworks, Connecticut continues to tighten restrictions.
Why the State Says Prediction Markets Are “Unlawful Sports activities Betting”
In its December 3 press launch, the DCP mentioned not one of the three platforms holds a license to supply wagering within the state.
“…their contracts violate quite a few different state legal guidelines and insurance policies, together with providing wagers to people below the age of 21,” learn an excerpt within the press launch.
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Regulators accuse the platforms of:
- Promoting to folks on the voluntary self-exclusion checklist
- Failing to implement integrity controls
- Permitting wagers on occasions with recognized outcomes
- Working exterior any consumer-protection framework
- Deceptive customers into believing the markets are authorized investments
“A prediction market wager shouldn’t be an funding,” mentioned DCP Gaming Director Kris Gilman.
Towards this backdrop, the DCP urges the platforms to stop all sports-event contracts and permit Connecticut residents to withdraw funds.
Whereas each Robinhood and Kalshi push again, citing federal oversight, solely the latter has filed a federal lawsuit difficult Connecticut’s authority.
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Nonetheless, this conflict highlights a rising authorized fault line between state playing legal guidelines and federal derivatives regulation.
“Unlucky drama. The battle between state playing legal guidelines and federal derivatives oversight proves regulatory incoherence,” one person on X (Twitter) remarked.
A Multi-State Wave of Battles Is Forming
Connecticut shouldn’t be alone. New York is embroiled in its personal authorized dispute with Kalshi. On the identical time, a latest Nevada ruling asserted that state regulators might management sports-based occasion contracts, undermining the business’s argument for unique federal oversight.
On the identical time, the regulatory surroundings is altering: Polymarket has gained CFTC approval and expanded to greater than 20 states, marking a stark distinction with Connecticut’s shutdown orders.
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What This Means for Crypto Markets and Prediction Platforms
The crackdown intensifies Connecticut’s divergence from nationwide crypto traits and heightens uncertainty across the authorized standing of event-based contracts.
With a number of states asserting authority, prediction markets face a sophisticated and fragmented US regulatory market.
Extra lawsuits are possible, and the result might decide whether or not prediction markets develop into federally supervised monetary merchandise or get handled as state-regulated playing.
The following milestone shall be Kalshi’s federal problem and whether or not extra states facet with Connecticut or observe the Polymarket-plus-CFTC mannequin.