Connecticut Regulators Target Kalshi, Robinhood, and Crypto.com Over Wagers: A Regulatory Crackdown Heats Up

Connecticut's financial watchdogs just took aim at three major players—Kalshi, Robinhood, and Crypto.com—over their wagering activities. It's a move that sends a clear signal: the line between trading and gambling is getting a fresh coat of regulatory paint.

The Regulatory Spotlight Intensifies

State authorities aren't whispering. They're putting public pressure on platforms that let users bet on event outcomes, questioning whether these services cross into territory traditionally reserved for licensed gambling operators. For crypto-native firms, it's another layer of scrutiny in an already complex compliance landscape.

Platforms in the Crosshairs

Kalshi's prediction markets, Robinhood's easy-access trading, and Crypto.com's expansive crypto offerings now share a common headache. The core issue? Defining what constitutes a 'wager' in the digital age. Regulators argue these activities might need the same oversight as a sportsbook—a notion that would upend current business models.

Broader Implications for Digital Finance

This isn't just a Connecticut story. It's a potential blueprint for other states watching how to handle the fusion of fintech, crypto, and speculative trading. A ruling here could force platforms to wall off 'gambling' features or seek costly licenses—another compliance tax on innovation.

The outcome could hinge on a simple, cynical finance truth: if it looks like a bet, smells like a bet, and prints money like a bet, regulators will eventually call it a bet—no matter how many tech buzzwords you dress it in.

TLDR

• Connecticut regulators issued cease and desist orders to Kalshi, Robinhood, and Crypto.com for operating unlicensed sports wagering platforms.
• The Connecticut Department of Consumer Protection ordered the companies to stop advertising and offering sports event contracts to state residents.
• Kalshi and Robinhood argue their platforms are federally regulated under the Commodity Futures Trading Commission.
• Crypto.com launched Fanatics Markets in 10 states despite the cease and desist order from Connecticut regulators.
• Connecticut officials warned that operating without a state license leaves consumers vulnerable to financial and personal data risks.

Connecticut regulators issued cease and desist orders to Kalshi, Robinhood, and Crypto.com on Wednesday, accusing them of operating illegal sports wagering platforms. The Connecticut Department of Consumer Protection (DCP) ordered the companies to halt advertising and offering sports event contracts to state residents. They also instructed the platforms to allow Connecticut users to withdraw their funds immediately.

Regulatory Action Against Kalshi and Robinhood

The cease and desist letters highlight that neither Kalshi nor Robinhood holds a license to offer sports betting in Connecticut. Bryan Cafferelli, commissioner of the state’s consumer protection department, emphasized that only licensed entities can offer sports wagers in the state.

“None of these entities possess a license to offer wagering in our state,” he stated.

Kalshi responded to the state’s directive by filing a lawsuit in federal court. The company argued that it operates under federal jurisdiction as a derivatives exchange regulated by the Commodity Futures Trading Commission (CFTC). Robinhood echoed similar claims, stating that its event contracts are federally regulated and offered through its CFTC-registered entity, Robinhood Derivatives.

Crypto.com Continues Expansion Despite Regulatory Pressure

Crypto.com is undeterred by the cease and desist order issued by Connecticut regulators. On the same day the state took action, Crypto.com announced the launch of Fanatics Markets, a new prediction platform created in partnership with Fanatics. The platform launched in 10 states, with plans for expansion to 24 more states, including California, Texas, and Florida.

Travis McGhee, global head of predictions at Crypto.com, emphasized that the company remains the first to launch sports prediction markets. He added that Crypto.com’s reach is growing through partnerships with platforms like Fanatics. The platform offers contracts related to sports, finance, economics, and politics.

JUST IN: Kalshi has sued the Connecticut Department of Consumer Protection in federal court alleging that state enforcement over sports event contracts is preempted by the CEA and it "intends to imminently seek an emergency temporary restraining order and preliminary injunction." pic.twitter.com/BdcoiPXP1a

— Daniel Wallach (@WALLACHLEGAL) December 3, 2025

Kalshi, on the other hand, faces multiple legal battles across several states. The company is involved in lawsuits in New Jersey, Maryland, and Nevada, in addition to the cease and desist orders from states like Arizona and Illinois. Despite this, Kalshi recently closed a $1 billion funding round, boosting its valuation to $11 billion.

Connecticut Regulators Warn of Consumer Risks

Connecticut regulators warned that operating outside the state’s regulatory framework could leave consumers vulnerable. Kris Gilman, the state’s gaming director, emphasized that platforms operating without state licenses expose users to financial and personal data risks. He noted that unlicensed platforms do not offer the same protections as legal sports betting operations in Connecticut.

The DCP expressed concerns over the lack of technical security standards for financial data, as well as the absence of integrity controls to prevent insider betting. The regulators also noted that the platforms allow wagers on events with known outcomes, giving insiders unfair advantages.

Connecticut currently allows sports betting through three licensed platforms: DraftKings, FanDuel, and Fanatics. These platforms require users to be at least 21 years old, a policy that the unlicensed platforms in question fail to comply with.