Connecticut’s Department of Consumer Protection (DCP) sent cease‑and‑desist letters to Robinhood, Kalshi, and Crypto.com on 2 December. The agency stated that certain sports‑related event contracts offered to residents violate state gaming law, classifying them as unlicensed sports wagering. Kalshi responded the following day by filing a lawsuit in Connecticut District Court and seeking an injunction to block enforcement of the order. So far, Crypto.com and Robinhood have not taken similar legal action.
Connecticut requires a state licence to offer sports wagering. The DCP stated that Robinhood, Kalshi, and Crypto.com do not hold the necessary licence, meaning any sports‑related event markets available to residents are not permitted under state law. The DCP also highlighted that sports wagering is restricted to individuals aged 21 and older.
According to the DCP, sports‑related contracts based on athletic outcomes fall within the definition of wagering, regardless of how platforms label them. The regulator focuses on whether users are risking value on sports results; if so, the activity is treated as sports betting and requires a state licence with full compliance. The letters noted that the contracts in question conflict with safeguards designed to protect younger users. Even if licences were available, the regulator said these products would still breach state rules, including age restrictions.
Kalshi filed a lawsuit in Connecticut federal court the day after receiving the cease‑and‑desist letter, seeking an injunction to block enforcement while the case proceeds. An injunction would temporarily stop Connecticut from enforcing the order against Kalshi, allowing the platform to continue operating while the court reviews the case. Without it, Kalshi could be required to suspend sports markets in Connecticut or restrict access entirely, depending on the court’s decision. However, the lawsuit is not publicly available, but it was first reported by U.S. gaming law and sports betting attorney Daniel Wallach on LinkedIn.
At the time of the letters, only Kalshi had filed suit. Robinhood and Crypto.com had not taken legal action and may be considering options such as compliance, geofencing, product changes, negotiation, or litigation. Their responses may differ based on product offerings, regulatory exposure, and risk tolerance.
Kalshi argues that the federal Commodity Exchange Act (CEA) overrides state gaming laws in this area. Its position is that event contracts listed on a CFTC‑regulated exchange fall under the federal commodities framework, making state gambling restrictions inapplicable. Kalshi maintains that the Commodity Futures Trading Commission (CFTC) has sole authority over the listing, trading, and clearing of event contracts on designated markets. If the CFTC regulates the product, state classification as gambling should not prevent access.
States such as Connecticut define gambling broadly as risking value on outcomes dependent on chance, and many separately regulate sports wagering. The DCP’s letters classify the products in question as sports wagering, which the state says requires a licence and compliance with its rules.
Kalshi argues that Connecticut’s broad definition of gambling could extend beyond sports to include election markets, economic data, or other non‑sports events, limiting a wide range of contracts. In Massachusetts, Kalshi has made a similar case, noting that statutory references to “other events” could be interpreted to cover more than sports and potentially shut down broader market activity. Applying that reasoning in Connecticut highlights the wider implications of a broad state reading.
Even if regulators focus only on sports, platforms may restrict all access in a state to avoid uncertainty. This approach affects users of non‑sports markets and can lead companies to take extra compliance measures when laws are unclear.
If an injunction is granted, Kalshi could continue operating in Connecticut temporarily while the court reviews the case, and other platforms might view this as an opportunity to advance similar claims. If the injunction is denied, platforms would likely restrict or withdraw sports event contracts for Connecticut users, a move that could also prompt other states to issue comparable orders.
A negotiated outcome might permit certain non‑sports contracts with strict age limits and disclosures, while sports markets would remain restricted without a state licence. Whatever the court decides, regulators in other states are expected to take guidance from the Connecticut case and issue similar or adjusted actions in response.
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