Connecticut Orders Robinhood, Kalshi, and Crypto.com to Halt Unauthorized Wagering

On December 3, the State of Connecticut ordered Robinhood, Crypto.com, and Kalshi to immediately halt their prediction-market offerings, accusing the companies of operating unlicensed online sports gambling in the state.

The Connecticut Department of Consumer Protection (DCP) issued cease-and-desist letters to instruct the platforms to stop providing sports-event contracts to state residents and to permit local users to withdraw their funds.

Regulators allege these companies lack a Connecticut wagering license and that their products violate state laws and consumer protection standards.

https://twittrr.com/WALLACHLEGAL/status/1996303098910777489?s=20

Kalshi Challenges State Orders, Claiming Exclusive Federal Derivatives Oversight

In its notice, the DCP said the companies were “conducting unlicensed online gambling, more specifically sports wagering,” through event contracts available on their platforms.

Commissioner Bryan Cafferelli said none of the firms hold a Connecticut wagering license and argued that their event-contract products “violate numerous other state laws and policies,” including rules prohibiting wagers by users under the age of 21.

DCP Gaming Director Kris Gilman added that the companies were “deceptively advertising that their services are legal” and operating outside required consumer-protection standards.

The agency warned that prediction-market platforms lack essential security and fairness controls, making it possible for insiders to manipulate markets or for users to bet on events with outcomes already known.

Meanwhile, Kalshi rejected the state’s position as the company claims that it operates as a federally regulated exchange under the Commodity Futures Trading Commission (CFTC) exclusive jurisdiction and not as a sportsbook. The company claims Connecticut’s action intrudes on the federal framework for derivatives markets and has filed suit in federal court.

Notably, Kalshi is also facing similar pressure in multiple states, including New York, Massachusetts, Arizona, Illinois, Montana, Ohio, New Jersey, Maryland, and Nevada.

Despite this, it recently closed a $1 billion funding round at an $11 billion valuation.

In another reaction, Robinhood stated that its contracts are also regulated by the CFTC through a registered derivatives entity.

However, Crypto.com has not commented on Connecticut’s decision. Currently, the state permits only DraftKings, FanDuel, and Fanatics to offer licensed online sports wagering under SB 146 (2021) and Public Act 21-23.

Robinhood Faces Intensifying Global Scrutiny as Regulatory Risks Mount

Separate investigations are intensifying pressure on Robinhood’s business model.

For example, Florida officials are actively demanding documents, marketing materials, and internal communications as they investigate alleged deceptive crypto promotions and misleading pricing claims.

https://twitter.com/business/status/1943416707323756677?s=20

At the same time, European authorities are questioning Robinhood’s legality and transparency in offering tokenized shares, following complaints from companies whose stocks were listed without approval.

These overlapping investigations now force Robinhood into a defensive posture, requiring the firm to justify its practices across two major jurisdictions.

As regulatory scrutiny accelerates, Robinhood must prove full compliance or risk fines and a substantial erosion of public trust.