Connecticut Targets Kalshi, Robinhood, and Crypto.com Over Sports Event Contracts

Connecticut's Department of Consumer Protection has ordered Kalshi, Robinhood, and Crypto.com to stop offering sports-related event contracts, deeming them illegal online gambling despite the firms’ assertions of federal oversight by the CFTC.

Key Takeaways

Connecticut regulators accused Kalshi, Robinhood, and Crypto.com of operating illegal online gambling by offering sports-related event contracts.
The Department of Consumer Protection highlighted failures in regulatory compliance and consumer protections.
Companies argue their offerings fall under federal derivatives regulations and not gambling laws.
The situation underscores the complexities of regulatory frameworks in the booming digital-asset and derivatives market.

Connecticut regulators target Kalshi, Robinhood, Crypto.com sports event contracts

Connecticut's Regulatory Action Against Event-Based Contracts

Connecticut's Department of Consumer Protection has issued cease-and-desist orders to Kalshi, Robinhood, and Crypto.com, mandating that these companies halt the provision of sports-related event contracts to residents of the state. These products have been labeled as unlicensed online gambling, violating state wagering laws. State officials noted that the three companies have been offering contracts tied to sports outcomes without fulfilling the regulatory requirements necessary for licensed sportsbooks.

Kalshi's Challenges with State Regulations

The agency identified several regulatory violations, including making offerings accessible to individuals under 21, failing to adhere to technical standards for platform integrity, and lacking necessary safeguards to prevent insider betting. Without licensing, these unregulated platforms leave consumers vulnerable, with little recourse if they lose funds or face disputes.

Both Kalshi and Robinhood have pushed back against the state’s classification, arguing that their event-based markets are governed by federal derivatives regulations instead of state gambling laws. They contend that their contracts are treated as financial instruments rather than mere bets.

The Growing Divide Between State and Federal Regulators

This situation points to a broader regulatory gap between state gambling authorities and prediction-market platforms that present themselves within the digital-asset and derivatives sectors, rather than as traditional sportsbooks.

Currently, state-licensed sportsbooks like FanDuel, DraftKings, and Fanatics operate in Connecticut under strict licensing conditions. However, the classification of derivatives-style platforms poses challenges for regulators as they navigate the legal statuses of such offerings.

Earlier in 2025, the Commodity Futures Trading Commission (CFTC) requested that Crypto.com pause trading in products linked to sports. This enforcement action follows legislation signed by Governor Ned Lamont just five months before, aiming to strengthen gambling regulation. Back in June 2024, Connecticut had already banned the offshore betting platform Bovada and issued a cease-and-desist order.

These regulatory efforts indicate that Connecticut's regulators plan to enforce state gambling laws on digital-asset platforms offering sports-linked contracts, regardless of companies' claims of federal oversight. This conflict between state gambling laws and CFTC-regulated derivatives has grown more pronounced with the rising popularity of prediction markets.