TLDR
- Connecticut’s DCP issued cease-and-desist orders to Kalshi, Robinhood, and Crypto.com for illegal gambling practices.
- The platforms offered unlicensed sports event contracts, violating state gaming laws in Connecticut.
- Kalshi, Robinhood, and Crypto.com misrepresented their services as legal, violating consumer protection laws.
- The DCP raised concerns about insufficient consumer protections and potential data security risks.
- All three platforms face penalties and must allow users to withdraw funds from their accounts.
Connecticut’s Department of Consumer Protection (DCP) has issued cease-and-desist orders to Kalshi, Robinhood, and Crypto.com. The regulators claim these platforms are offering unlicensed sports prediction products, which they consider illegal gambling. The companies have been accused of violating state gaming laws by marketing and offering these products without the necessary licensing.
Alleged Violations of State Gambling Laws by Kalshi and Robinhood
According to a press release by the Department of Consumer Protection, KalshiEX LLC and Robinhood Derivatives LLC are accused of offering unlicensed sports event contracts in Connecticut. The DCP maintains that these products resemble illegal wagers and violate state gaming laws. Bryan T. Cafferelli, the Consumer Protection Commissioner, said, “Only licensed entities may offer sports wagering in Connecticut.”
The cease-and-desist orders prevent both Kalshi and Robinhood from promoting or offering their gambling services to Connecticut residents. State officials also argue that these companies operate outside the legal framework, exposing consumers to financial and data security risks. Both platforms are alleged to have misrepresented their services as legal in Connecticut, violating consumer trust.
Crypto.com Faces the Same Allegations of Unlicensed Gambling
Crypto.com also faces allegations for offering sports event contracts without the required license in Connecticut. Like Kalshi and Robinhood, the platform has been accused of promoting illegal gambling products to residents. Kris Gilman, Gaming Director at the DCP, pointed out, “A prediction market wager is not an investment,” highlighting the distinction between trading and betting.
The DCP’s order reflects concerns about the lack of consumer protection on Crypto.com’s platform. Without adherence to state regulations, users are left exposed to the risk of financial and personal data breaches. Additionally, Crypto.com, like the other platforms, does not implement necessary integrity controls to prevent insider trading or suspicious activity.
Consumer Protections and Underage Betting Concerns
State officials raised serious concerns about consumer protection on these unlicensed platforms. As Kalshi, Robinhood, and Crypto.com are not subject to Connecticut’s technical standards, users’ financial and personal data could be at risk. The state also noted that the platforms failed to block insiders from betting on events where they may have unfair influence, a requirement for licensed operators.
The cease-and-desist orders also highlight violations involving underage betting. All three companies are accused of offering their products to individuals under the legal age of 21 and those on Connecticut’s Voluntary Self-Exclusion List. In addition, marketing these products on college campuses was deemed illegal under Connecticut law.
Failure to comply with the orders could result in civil penalties under the Connecticut Unfair Trade Practices Act. These platforms must also allow Connecticut residents to withdraw any funds currently held on their sites. Only three operators, DraftKings, FanDuel, and Fanatics are authorized to offer sports betting in the state.
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