Connecticut’s latest prediction markets enforcement action is not simply another warning to operators.
The Connecticut Department of Consumer Protection last week issued cease-and-desist orders to nine companies it said are illegally offering sports-related prediction markets to Connecticut customers.
The list includes:
- Coinbase
- Crypto.com
- Gemini
- Novig
- Polymarket
- ProphetX
- Robinhood
- Underdog Predict
- Webull
The notice ordered the operators to stop advertising, promoting or making available sports event contracts and other alleged unlicensed online gambling in the state, while allowing Connecticut customers to withdraw money held on the platforms. The action also included nearly 30 subpoenas to gaming service providers and Connecticut media outlets for “information pertinent to the state’s investigation into illegal prediction market operations.”
How this move is different
Connecticut’s first push against prediction markets has been against Kalshi since earlier this year. This wave includes major consumer finance and crypto brands, as well as brokerage platforms that have brought sports event contracts to more people.
“Connecticut has been at the forefront of this issue, leading the way in protecting consumers—including young people, student athletes, and those suffering from gambling addiction—from unregulated gambling markets, which put your money and information at risk,” Gov. Ned Lamont said in a release.
“Prediction markets have branded themselves as legal and safe, but the reality is they are not adhering to Connecticut’s consumer protection standards and gaming laws, and they are not being truthful when they tell consumers that their activities are legal. When we legalized sports wagering in 2021, the goal was to create a safe, responsibly regulated market for Connecticut consumers, not to open a free-for-all.”
The state said failure to comply with the new orders could lead to civil penalties under the Connecticut Unfair Trade Practices Act and potential criminal penalties under state gaming law. It has also left open the prospect of judicial action.
CT’s move beyond Kalshi
The state sued Kalshi in late August, seeking to block the company from offering what it calls unlicensed sports wagering. The suit followed an August federal court setback for Kalshi, when U.S. District Judge Vernon Oliver denied its request for a preliminary injunction against Connecticut enforcement. Kalshi has appealed that ruling to the Second Circuit.
Kalshi defends its contracts as federally regulated swaps, not sports wagers, and says the Commodity Exchange Act gives the Commodity Futures Trading Commission primary authority over the product.
Courts so far have been unreceptive. The federal court found that the sports contracts at issue were sports wagers rather than swaps protected from state regulation.
Operators have been in communication with the Department of Consumer safety, including Novig, ProphetX, Gemini and Webull, according to the New Haven Register.
Connecticut targets the ecosystem
The state’s action last week challenges the distribution model as much as the prediction markets themselves.
DCP said it issued nearly 30 subpoenas to gaming service provider licensees, media organizations, app stores and payment-related businesses that could possess information relevant to the state’s investigation. The entities are not targets of the investigation, the release said. The list includes:
- Apple’s App Store
- Apple Pay
- Genius Sports
- Google Play
- Google Wallet
- LexisNexis
- PayPal
- Plaid
- Socure
- Sportradar
- Stripe
Whether the subpoenas ultimately produce enforcement evidence, settlement discussions, or no significant public action, they demonstrate that states are willing to explore tools beyond suing the prediction markets exchanges.
Prediction markets too big to ignore
The action comes as prediction market sports products have become too large for regulators to dismiss as niche. Connecticut cited an American Gaming Association estimate that $40bn could be wagered on NFL-related prediction markets this year.
It also pointed to one market reporting nearly $250m in college football trading volume on the first day of the 2026 season.
The figures help explain why state regulators and licensed sportsbooks now see sports event contracts as an immediate competitive and consumer protection issue.
“Our laws are clear: sports betting may only be offered by legal, licensed sportsbooks that adhere to our regulations and technical standards,” Consumer Protection Commissioner Bryan Cafferelli said in the release. “We are, first and foremost a consumer protection agency, and we will continue to do everything we can to protect all Connecticut consumers from misleading business practices that compromise their health and safety, personal information and hard-earned money.”
National prediction market legal map emerges
The national picture became more complicated in August, when the Ninth Circuit Court of Appeals ruled that Kalshi’s sports event contracts were not federally protected swaps and allowed Nevada to enforce its gambling laws. The decision directly conflicted with the Third Circuit’s April ruling that the Commodity Exchange Act likely preempts New Jersey from regulating Kalshi’s sports markets.
New Jersey has since asked the U.S. Supreme Court to resolve that split, as have Crypto.com and Polymarket.
For Connecticut, the Ninth Circuit ruling provides useful support for its own prediction markets enforcement campaign. But unless the Supreme Court takes New Jersey’s case, operators and regulators will continue working under a fractured legal map, one where a sports contract may be protected in one circuit and treated as illegal gambling in another.
For now, Connecticut has made clear that an operator’s assertion of federal regulation will not keep state gaming regulators from acting.
