Three Prediction Markets Exit Connecticut Following Cease-and-Desists

_{Connecticut Gov. Ned Lamont’s administration, through the state’s Department of Consumer Protection, has led the enforcement push that drove three prediction-market operators out of the state. (Photo: Aaron Flaum / Hartford Courant /TNS / Sipa USA)}

Three prediction markets issued cease-and-desist orders by the Connecticut Department of Consumer Protection (DCP) have stopped operating in the state, officials said on Monday.

ProphetX, Gemini, and Webull each withdrew their services from Connecticut, state officials confirmed to media this week.

Legal Success Leads to State Action Against Prediction Markets

The decision comes amid an ongoing fight between Connecticut officials and prediction markets, one that mirrors similar disputes occurring across the country this year. Connecticut officials have alleged that prediction markets are violating state law by offering contracts on sports events, which the state says are equivalent to sports betting.

While sports betting is legal in Connecticut, only three companies – DraftKings, FanDuel, and Fanatics – are licensed to operate in partnership with the state’s gaming tribes and the Connecticut Lottery.

Kalshi and Coinbase had sought preliminary injunctions to prevent Connecticut from enforcing its gambling laws against their operations, arguing that they offered swaps that are regulated by the Commodity Futures Trading Commission (CFTC) at the federal level, preempting any state regulation. But a federal judge denied that injunction in August, and Connecticut issued its cease-and-desist orders in September. Officials also sent subpoenas for information to dozens more companies that might have information about prediction market activity in the state.

“Our actions sent a clear message,” DCP Commissioner Bryan Caferelli said in a statement. “We will not tolerate illegal prediction market activity that preys upon the most vulnerable consumers. Three prediction market operations heard that message and are leaving our state accordingly. We are hopeful the rest will decide targeting Connecticut consumers isn’t worth breaking the law.”

In addition to the three companies that have pulled their prediction markets, orders were also sent to Coinbase, Crypto.com, Novig, Polymarket, Robinhood, and Underdog. The state has also sued Kalshi, seeking an injunction that would prevent the company from operating in Connecticut.

State Battles May Lead to Supreme Court Showdown

In addition to lacking licensing in Connecticut, state officials have noted that prediction markets broadly violate the state’s gaming regulations in other ways, including allowing trades from users as young as 18 – Connecticut has a minimum gambling age of 21 – and allowing trading on college teams in the state. DCP officials also allege that prediction markets have sent advertising to individuals on the state’s gambling self-exclusion list.

While state-level legal action continues between prediction markets and state officials across the country, conflicting rulings at the federal appellate level have made an eventual showdown in the Supreme Court of the United States likely. In September, New Jersey officials asked SCOTUS to consider a 3rd Circuit decision that went in Kalshi’s favor, while the 9th Circuit and 6th Circuit have each ruled unanimously that states can enforce their gambling regulations against prediction markets.

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