Connecticut orders Kalshi, Robinhood, Crypto.com to stop sports event contracts as illegal wagering
Connecticut’s Department of Consumer Protection (DCP) has issued cease-and-desist orders to prediction-market platforms Kalshi, Robinhood and Crypto.com, demanding they immediately stop offering sports-linked event contracts to state residents. The DCP classifies these contracts as unlicensed online gambling under state wagering laws and cites consumer-protection risks: access by under-21 users, weak platform integrity and technical controls, insufficient safeguards against insider wagering, and deceptive advertising. The platforms contend their markets are federal derivatives regulated by the Commodity Futures Trading Commission (CFTC) rather than traditional sportsbooks; Kalshi has already sued in federal court asserting CFTC jurisdiction. The action follows prior state enforcement moves (including a 2024 Bovada ban and recent expanded legislation) and earlier regulatory engagement by the CFTC, which previously asked Crypto.com to pause sports-linked products. The orders escalate a broader regulatory clash between state gambling authorities and prediction-market/derivatives-style platforms. For crypto traders, the dispute creates legal uncertainty for platform operations and user access in regulated U.S. states, could reduce liquidity and product availability on affected platforms, and may prompt shifts in where sports-linked derivatives and prediction markets operate or list — potentially affecting tokens, trading volumes and correlated market instruments tied to those platforms.
Neutral
Short-term: Neutral to slightly negative. The cease-and-desist orders threaten availability of sports-linked contracts on the named platforms, which could reduce liquidity and trading volume in those specific markets. Traders in sports derivatives or platform-native tokens tied to Kalshi, Robinhood Markets (if applicable) or Crypto.com may see temporary disruptions, delistings, or narrower spreads. However, the impact is limited to sports-linked products and the platforms named; broader crypto spot markets and unrelated tokens are unlikely to move materially solely because of this order.
Long-term: Mixed/neutral. The case may prompt legal clarification: if courts confirm CFTC jurisdiction, platforms could continue under federal oversight, restoring market confidence and product access. If states prevail, platforms may restrict services in regulated states or redesign products to comply, pushing activity to less-regulated venues or centralized exchanges. Either outcome could shift where and how sports-linked derivatives trade, alter liquidity distribution, and affect businesses building on these products. Overall, the event raises regulatory risk and fragmentation concerns but does not, on its own, indicate systemic market-wide bearishness for major cryptocurrencies.