Connecticut Goes Nuclear on Prediction Markets
Key Points
- Connecticut ordered nine prediction market companies, including Polymarket, Robinhood and Coinbase, to stop making sports event contracts available to state residents.
- The Department of Consumer Protection also issued 29 subpoenas covering gaming service providers, media companies, app stores and payment services.
- Connecticut says subpoena recipients including PayPal, Plaid, Sportradar, Genius Sports, ESPN, Apple and Google are not themselves under investigation.
- The enforcement comes after a federal judge rejected Kalshi’s effort to block Connecticut from applying its gambling laws to sports event contracts.
Connecticut Orders Nine Prediction Market Companies to Stop Sports Contracts
The Connecticut Department of Consumer Protection announced the new enforcement action on September 10, ordering Polymarket, Coinbase, Crypto.com, Robinhood, ProphetX, Novig, Webull, Gemini and Underdog Predict to stop advertising, promoting or making sports event contracts and other alleged unlicensed online gambling available to Connecticut residents.
The state maintains that sports event contracts offered without a Connecticut gaming license violate both its gambling laws and unfair trade practices statutes.
DCP also alleges that these products have been made available to people younger than Connecticut’s legal sportsbook age of 21, people enrolled in the state’s voluntary self-exclusion program and bettors wagering on Connecticut collegiate sports, which state law restricts.
Our laws are clear: sports betting may only be offered by legal, licensed sportsbooks that adhere to our regulations and technical standards,
DCP Commissioner Bryan T. Cafferelli said in the state’s announcement.
Polymarket, Robinhood and Coinbase Among Nine Prediction Market Targets
The September orders substantially expand a campaign that initially focused on a much smaller group of operators. Connecticut sent cease-and-desist letters to Kalshi, Robinhood and Crypto.com in December 2025 before becoming embroiled in federal litigation with Kalshi over whether federal commodities law prevents the state from enforcing its gambling rules.
The new group reaches well beyond dedicated prediction market exchanges. It includes companies better known for brokerage, cryptocurrency and fantasy products alongside platforms built more directly around event trading.
That breadth is important from an enforcement perspective. Connecticut is applying the same underlying state gambling theory across several different business models rather than treating the Kalshi litigation as an isolated dispute involving a single federally designated contract market.
Connecticut Also Issued 29 Prediction Market Subpoenas to PayPal, ESPN and Apple
DCP simultaneously issued 29 subpoenas to companies and organizations that may have information relevant to its investigation. Nine went to gaming service provider licensees, including PayPal, Plaid, Integrity Compliance 360, Sportradar Solutions and Genius Sports entities.
Another 15 went to media organizations including ESPN, NBC Connecticut, Hearst Connecticut Media and iHeartMedia. Apple App Store, Google Play, Apple Pay, Google Wallet and Stripe were also subpoenaed.
Connecticut has been explicit that those subpoena recipients are not under investigation.
This scope gives DCP access to a much wider view of how sports event contracts are distributed and supported. Payment relationships, identity verification, integrity services, sports data, advertising and app distribution all sit somewhere between the underlying exchange and the bettor using the product.
Federal Kalshi Ruling Strengthens Connecticut Prediction Market Crackdown
Connecticut is also acting from a considerably stronger litigation position than it had when DCP first sent cease-and-desist letters in December.
U.S. District Judge Vernon D. Oliver denied Kalshi’s request for a preliminary injunction in August, concluding that the sports event contracts at issue were not swaps within the meaning of the Commodity Exchange Act and that federal law did not preempt Connecticut’s traditional authority over sports wagering. The court subsequently denied Kalshi’s request for an injunction while it appeals.
Kalshi has appealed to the Second Circuit, so the underlying jurisdictional dispute remains unresolved. The district court ruling also came during preliminary injunction proceedings rather than after a final judgment on the merits, and companies named in Connecticut’s latest orders may raise different arguments based on how their products are structured.
The national case law remains divided. The Third Circuit ruled in April that Kalshi had shown a likelihood of succeeding on its argument that federal commodities law preempts New Jersey gambling regulation, while the Ninth Circuit reached the opposite conclusion in August in Kalshi’s dispute with Nevada regulators.
Why This Matters For Bettors
For Connecticut bettors, the most immediate issue is access. If the nine companies comply with DCP’s orders, sports contracts available through those products could disappear behind another geographic restriction even while similar markets remain available elsewhere in the country.
Traditional sportsbook customers should see little direct disruption. Connecticut’s licensed sportsbook market remains in place through DraftKings, FanDuel and Fanatics, and DCP’s action is aimed at companies offering sports products outside that framework.
The difference is more consequential for bettors using prediction markets specifically because they offered another route to sports markets. It is particularly relevant to 18-to-20-year-old users: Connecticut requires customers to be 21 to use a regulated sportsbook, so anyone in that age group losing access to a prediction market does not have an equivalent state-regulated sportsbook option.
The broader industry issue is how Connecticut is conducting the investigation. Subpoenaing companies around the platforms gives regulators visibility into the infrastructure supporting the product. Those subpoenas do not require payment companies, data suppliers, app stores or media businesses to stop working with prediction markets, but information obtained through them could support additional enforcement or reveal relationships regulators want to examine more closely.
That approach could become significantly more important if other states adopt it. Nationally distributed platforms have already had to contend with an expanding patchwork of litigation and geographic restrictions. Pressure extending into payments, distribution, data and marketing would add another layer of regulatory risk for operators trying to maintain a nationwide sports product.
For companies such as Robinhood and Underdog, geographic fragmentation is particularly awkward. Products designed for broad national distribution become harder to operate consistently when individual states can force sports contracts behind state borders while appellate courts continue to disagree over who has jurisdiction.
What Happens Next
The nine companies now have to decide whether to comply with Connecticut’s orders, contest them or pursue some combination of legal and operational responses. DCP says failure to comply can lead to additional enforcement, including civil penalties under the Connecticut Unfair Trade Practices Act and potential criminal penalties under state gaming statutes.
The subpoenas could also generate additional investigative steps as Connecticut examines the businesses surrounding prediction market distribution. Meanwhile, Kalshi’s Second Circuit appeal remains one of the clearest opportunities for an appellate court to determine whether Connecticut can apply its gambling laws to federally regulated sports event contracts.
Marcus has spent over 20 years navigating the legal side of online betting - from his early days consulting for offshore operators to helping licensed U.S. sportsbooks launch in regulated markets. He’s worked with compliance teams, reviewed licensing frameworks in 15+ states, and advised on some of the biggest regulatory shifts since PASPA was repealed.
At BettingScanner, Marcus serves as the voice of reason - translating legalese into plain English and helping bettors understand what’s legal, what’s risky, and where the gray areas live. If you’re ever unsure about the rules, Marcus is your man - as he probably helped write them.
