Connecticut has sent notices to Kalshi, Robinhood, and Crypto.com for operating illegal online gambling, particularly sports betting. Connecticut has joined other states claiming a rise in illegal sports betting under the prediction market umbrella, which has led to a setback for Kalshi, Robinhood, and Crypto.com.
Kalshi, Robinhood, and Crypto.com Ordered to Halt Online Betting
The Connecticut Department of Consumer Protection (DCP) Gaming Division issued cease and desist orders to KalshiEX LLC, Robinhood Derivatives, LLC, and Crypto.com. The regulator has claimed that these platforms are conducting unlicensed gambling activities, mainly sports betting.
“Only licensed entities may offer sports wagering in the State of Connecticut,” said DCP Commissioner Bryan T. Cafferelli. The official claims these companies do not have a license to offer wagering in the state. He added that their contracts violate numerous state laws and policies, including a prohibition on offering wagers to individuals under the age of 21.
DCP Gaming Director Kris Gilman, said:
Prediction market platforms offering “sports events contracts” are illegal and put consumers’ money and personal information at risk for several reasons.
All three platforms are ordered to immediately cease and desist from advertising, offering, promoting, or otherwise making available “sports event contracts” or any other form of unlicensed online gambling to Connecticut residents. The DCP has also ordered all three platforms to allow Connecticut residents to withdraw any funds currently held on the platforms.
The order noted that failing to comply may result in additional actions such as civil penalties and criminal penalties for violating the state’s gaming statutes. Only three gaming platforms DraftKings, FanDuel and Fanatics are licensed to offer sports wagering in Connecticut.
Challenges Faced by Sport Prediction Markets
Kalshi, Robinhood, and Crypto.com are facing regulatory and legal challenges. As CoinGape reported earlier, Kalshi faced another class action lawsuit on allegations of operating unlicensed sports betting. This comes as the company reaches $11 billion in valuation after $1 billion raise.
Kalshi has filed a lawsuit in the Connecticut District Court in response to Connecticut’s latest order, seeking an injunction barring the enforcement of the cease-and-desist order. Recently, the firm says it operates only as a federally regulated derivatives exchange under the CFTC.
Robinhood and Crypto.com have also faced lawsuits for their sports prediction markets. Robinhood continues to expand its sports prediction market offering, with the latest acquisition of LedgerX. Notably, Crypto.com agreed to suspend its sports prediction market offerings in Nevada amid a legal dispute with Nevada Gaming Control Board.
Source: https://coingape.com/kalshi-robinhood-and-crypto-com-face-cease-desist-order-in-connecticut/
