Connecticut Issues Cease-and-Desist Orders Against Nine Prediction Market Platforms

Connecticut's enforcement actions against unlicensed prediction market platforms intensified this month, as the state delivered nine cease-and-desist orders and 30 subpoenas to operators offering sports event contracts without proper authorisation. Governor Ned Lamont framed the move as a direct defence of the state’s gaming laws and consumer protection standards, issuing an explicit warning to platforms advertising or accepting bets from residents in contravention of the regulatory framework.

Connecticut's Targeted Crackdown on Prediction Markets

The Department of Consumer Protection (DCP) asserted its jurisdiction by instructing nine major platforms to immediately halt all activities involving 'sports event contracts' for Connecticut users. Recipients of the cease-and-desist letters include Polymarket, Coinbase, Crypto.com, Robinhood, ProphetX, Novig, Webull, Gemini, and Underdog. Each is accused of operating in violation of Connecticut’s stringent gaming and trade practice laws and ordered to "cease and desist advertising, offering, promoting or otherwise making available 'sports event contracts' or any other form of unlicensed online gambling to Connecticut residents."

Civil and criminal penalties are on the table for operators that fail to comply. Governor Lamont specifically highlighted that the state's intent is to block unregulated access and protect local consumers from unlicensed products and the risks they carry.

Legal Foundation: Unlicensed Sports Event Contracts

Connecticut’s regulatory environment only permits three licensed sportsbooks — DraftKings, FanDuel, and Fanatics — to offer sports betting services. All other offerings, including prediction market contracts on sporting outcomes, are deemed illegal in the state. This legal positioning was further entrenched by a recent federal court decision confirming that sports event contracts are not protected by commodities law, reinforcing state-level oversight.

The nine firms targeted are alleged to have:

• Accepted wagers from prohibited bettors, including those voluntarily self-excluded and individuals under 21
• Provided contracts on collegiate sporting events, which is expressly prohibited
• Marketed unlicensed gambling to local residents

At the end of August, the state escalated its enforcement by suing Kalshi and seeking an injunction to stop it operating prediction market contracts in Connecticut, marking a broader trend of legal pressure against platforms not holding a state licence.

Subpoenas: Information Gathering and Not Direct Investigation

While 30 subpoenas have been dispatched to various businesses, Governor Lamont clarified these entities are not currently under DCP investigation. Instead, they may hold information assisting state efforts to restrict the operation of unauthorised platforms within Connecticut’s jurisdiction. This step aligns with the DCP’s approach — gathering market intelligence to reinforce its position against unlicensed betting products.

Context: National and Interstate Enforcement Trends

The clampdown in Connecticut occurs as larger platforms face challenges elsewhere. Notably, the world’s largest prediction markets platform is contesting a $36 billion lawsuit out of New York and facing adverse court decisions, including a Ninth Circuit ruling giving Nevada regulators authority over event contracts. These moves signal growing collaboration and alignment between US states on enforcing restrictions against unauthorised prediction market activity.

Regulatory Rationale and Public Messaging

Governor Lamont defended these actions by referencing the original goals of Connecticut’s 2021 sports wagering legalisation. The focus, he said, was building a "safe, responsibly regulated market" rather than permitting uncontrolled online betting. Lamont blasted prediction market operators for presenting themselves as legal and safe while failing to comply with the state’s consumer protection and gaming standards.

"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 their activities are legal," Governor Ned Lamont stated.

The messaging from the state government is clear: only platforms holding a Connecticut-authorised licence can service local bettors. Activity outside this licensing regime is considered illicit and exposes consumers, including at-risk groups such as those self-excluded and underage, to unregulated gambling environments.

What This Means for Operators and Market Participants

Operators serving US residents increasingly face a patchwork of state regulations. Connecticut’s position puts platforms on notice: participation in the market requires state licensing, and consumer protection obligations are non-negotiable. Civil or criminal liabilities await those that cross these regulatory boundaries, and ongoing intelligence efforts suggest further enforcement actions may follow.

Industry stakeholders should pay close attention to regulation trends across the US, where state authorities are now more assertive about their control of permitted betting and market access. For platforms invested in prediction market models, the message is unequivocal — obtain the required licence or face legal headwinds in states like Connecticut.