Connecticut expanded its campaign against sports event prediction markets beyond Kalshi. Last week, the state issued cease-and-desist orders to nine companies and nearly 30 subpoenas that reach payment processors, app stores, identity-verification providers, sports-data businesses and media organizations.
The Connecticut Department of Consumer Protection’s actions, announced in a Thursday (Sept. 10) press release, show how states may use their gambling and consumer protection powers to pressure not only prediction market operators but also the broader infrastructure that helps distribute, promote and support their products.
The department ordered Polymarket, Coinbase, Crypto.com, Robinhood, Gemini, ProphetX, Novig, Webull and Underdog Predict to immediately stop advertising, offering, promoting or otherwise making sports event contracts or allegedly unlicensed online gambling available to Connecticut residents, according to the release.
The companies were also directed to permit Connecticut customers to withdraw funds held on their platforms. The state warned that failure to comply could lead to civil penalties under the Connecticut Unfair Trade Practices Act or criminal penalties under state gaming statutes, the release said.
The orders are administrative enforcement actions, not final judicial findings. Connecticut’s claims that the products constitute illegal gambling could also face challenges based on federal commodities law and the Commodity Futures Trading Commission’s authority over event contracts.
Connecticut said in the release that the platforms do not comply with state consumer protection and gaming standards and have accepted wagers from prohibited customers, including people younger than 21 and individuals on the state’s voluntary self-exclusion list. Prediction markets have offered contracts involving Connecticut collegiate sports, which state law generally excludes from lawful sports wagering.
“Our laws are clear,” Consumer Protection Commissioner Bryan Cafferelli said in the release. “Sports betting may only be offered by legal, licensed sportsbooks that adhere to our regulations and technical standards.”
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The department has not publicly posted the individual cease-and-desist letters, although it said in the release that they are available through a public records request.
The subpoenas could have wider implications for companies that do not operate prediction markets themselves. Recipients include payment and identity businesses PayPal, Plaid, Paysafecard, Socure and LexisNexis; sports data and compliance providers Sportradar, Genius Sports and Integrity Compliance 360; and Apple’s and Google’s app stores and digital wallets. Stripe also received a subpoena, according to the release.
Connecticut subpoenaed 15 media organizations, including ESPN, Hearst Connecticut Media, the Hartford Courant and several broadcasters. The recipients are not under investigation but may possess information pertinent to its inquiry, the release said.
Connecticut has not accused the infrastructure or media companies of violating gaming laws. Still, the information requests may help regulators trace how prediction market products are advertised, financed, accessed, and screened for age and geographic eligibility.
The initiative expands Connecticut’s previously reported litigation against Kalshi, which is proceeding separately, the release said. A federal judge in August rejected Kalshi’s request to block Connecticut enforcement, concluding at the preliminary stage that federal commodities law did not protect its sports event contracts from state gambling regulation. Kalshi has appealed.
Courts elsewhere are divided over the issue. The 9th Circuit ruled that Nevada can pursue its claims against Kalshi, but the 3rd Circuit held that New Jersey’s similar claims against the company are preempted by federal law. New Jersey has appealed that ruling to the Supreme Court.
Against that unsettled backdrop, Connecticut’s latest actions offer a potential enforcement model for other states. Regulators may be able to make prediction market products harder to distribute by scrutinizing payments, app access, advertising, customer identification and sports data relationships, even before the Supreme Court settles the jurisdictional question.
For exchanges, brokerages and technology vendors, the compliance risk is therefore no longer limited to whether an event contract qualifies as a federally regulated derivative. Companies may also need state-specific controls governing marketing, age verification, self-exclusion, geolocation, prohibited events and relationships with service providers.
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