Connecticut intensifies actions against predictive market platforms with nine cease-and-desist orders

Connecticut has strengthened measures against illegal predictive markets by issuing nine cease-and-desist orders and 30 subpoenas to companies related to platforms offering sports event contracts. The state authorities aim to halt the offering of bets and contracts linked to sporting outcomes without a license, penalizing operators who violate the law and those who facilitate access to state residents.

Cease-and-Desist Orders and Targeted Platforms

The Connecticut Department of Consumer Protection (DCP) sent cease-and-desist letters to nine key platforms: Polymarket, Coinbase, Crypto.com, Robinhood, ProphetX, Novig, Webull, Gemini, and Underdog. According to the official directive, these companies must "immediately cease" any form of advertising, promotion, or offering of sports event contracts — or any other type of unauthorized online gambling — directed at residents in Connecticut. Noncompliance could lead to the possibility of facing civil and criminal penalties.

Subpoenas and Scope of the Investigation

Alongside the cease-and-desist orders, the DCP issued 30 subpoenas to businesses that, although not under direct investigation, may provide relevant information to prevent the operation and expansion of predictive markets within the state. Authorities emphasize that the goal is to identify connections and outline the extent of illegal offerings, not to initiate criminal investigations against all those subpoenaed.

Betting Legislation and Authorized Operators

Connecticut has strictly regulated the online gambling industry since the legalization of sports betting in 2021. Currently, only three sportsbooks have obtained state licensing: DraftKings, FanDuel, and Fanatics. The identified operations offer services without a license, violating both the gambling law and state commerce regulations.

Governor Ned Lamont underscored that these platforms have facilitated access for voluntarily excluded individuals, prohibited bettors, and those under 21 years old. Additionally, many offer contracts related to outcomes in college sports, which is expressly prohibited in Connecticut.

Legal Battle and Recent Jurisprudence

At the end of August, Connecticut filed a lawsuit and attempted to obtain a court order to prevent Kalshi — another platform — from operating in the state. A local federal judge ruled that contracts on sports events are illegal and not covered by federal commodities law.

Connecticut's action occurs in a legal context that is adverse to these markets in other jurisdictions. The world's largest prediction platform is currently facing a $36 billion lawsuit in New York, along with a Ninth Circuit ruling recognizing Nevada's regulatory authority over these contracts.

“Connecticut has been a leader in consumer protection against unregulated betting markets, which risk both users' money and information," declared Governor Ned Lamont. “Predictive markets have projected an image of legality and safety, but they do not comply with state regulations nor are they transparent regarding the legality of their activities.”

“We legalized sports betting to create a safe market, not to open the door to unregulated operators,” concluded Lamont.

The Debate on Predictive Markets and Player Protection

The measures adopted seek to ensure that regulation is not exploited to circumvent consumer protection controls. The state's position is clear: any online gambling activity or contracts about sports outcomes must be licensed by the DCP. Unauthorized platforms fall into the illegal market, with significant criminal and administrative implications.

This decision reinforces Connecticut's stance against the increasing offering of hybrid products between betting and prediction, particularly in college sports or among youthful audiences, groups identified as particularly vulnerable according to Lamont.

Implications for Operators and Markets

Connecticut's actions send a signal to operators and the B2B betting sector: the expansion of products similar to predictive markets will face strict scrutiny, especially if aimed at users outside the regulated framework. For licensed operators, this consolidates market exclusivity and underscores the importance of maintaining robust controls over age, self-exclusion, and the types of events covered.

The legal situation in the United States remains fragmented, with Nevada and New York taking differing stances on the legality and scope of prediction markets. However, Connecticut stands out as a leading case in protection policies and control over this segment.