Connecticut Targets Nine Prediction Market Platforms with Cease-and-Desist Orders

The Connecticut Department of Consumer Protection issued cease-and-desist orders in September 2026 to nine prediction market companies, directing them to halt all advertising, promotion, and offering of sports event contracts to state residents while requiring them to permit Connecticut customers to withdraw their funds. This move follows an August federal court ruling that classified such contracts as illegal unlicensed gambling outside the protections of federal commodities law, and it builds directly on earlier enforcement actions including a lawsuit against Kalshi. Officials cited consumer protection concerns, particularly risks to young people and individuals facing gambling issues, while pointing to the state's existing licensed sportsbooks such as DraftKings, FanDuel, and Fanatics as the approved channels for legal betting. The companies named in the orders include Polymarket, Coinbase, Crypto.com, Robinhood, ProphetX, Novig, Webull, Gemini, and Underdog Predict, each of which received formal directives to stop operations involving Connecticut residents immediately.

Details of the Enforcement Action

The orders require the platforms to cease any promotion or facilitation of sports event contracts that allow users to wager on outcomes such as game results or player performances. State regulators emphasized that these activities constitute unlicensed gambling under Connecticut law, and the companies must ensure users can access and remove their deposited funds without delay. Observers note that the timing aligns with the recent federal court decision, which clarified that prediction market contracts tied to sports events do not qualify for commodity trading protections and instead fall under state gambling regulations.

Connecticut officials have linked this enforcement to prior steps taken against similar platforms, including the earlier lawsuit involving Kalshi. The department's approach focuses on stopping illegal offerings while protecting residents' ability to recover balances, a measure intended to reduce potential financial harm from unregulated markets.

Legal Background and Court Ruling

An August federal court decision established that sports event contracts on prediction markets amount to unlicensed gambling rather than regulated commodity transactions. This ruling provided the foundation for state-level actions like the ones issued in Connecticut, where regulators applied the precedent to direct the nine companies to withdraw from the state market. The decision clarified boundaries between federal commodities oversight and state authority over gambling activities, prompting multiple jurisdictions to review their own regulatory positions.

State enforcement documents reference the federal ruling as the catalyst for the current orders, noting that platforms had continued to offer sports-related contracts despite the legal clarification. The companies must now comply by removing access for Connecticut users and halting all related promotional efforts within the state.

Consumer Protection Measures

Regulators highlighted risks to specific populations, including younger users and those with gambling vulnerabilities, as key reasons for the swift action. The orders direct the platforms to facilitate fund withdrawals for affected Connecticut customers, ensuring that individuals who had placed money into these markets can retrieve their balances. Officials contrasted the illegal platforms with the state's licensed sportsbooks, which operate under strict oversight and contribute to regulated revenue streams.

According to the Governor Lamont announcement, the state aims to steer residents toward authorized operators while eliminating exposure to unlicensed alternatives. The enforcement includes requirements that the nine companies confirm compliance and demonstrate that Connecticut users no longer have access to sports event contracts.

Companies Affected and Immediate Requirements

Each of the nine platforms received individual cease-and-desist orders listing the same core mandates: stop advertising or offering sports event contracts to Connecticut residents and enable immediate withdrawals. The list encompasses both established cryptocurrency exchanges and specialized prediction market operators, reflecting the broad reach of the state's regulatory response. Platforms must now update their systems to block Connecticut IP addresses and user registrations tied to the state while processing any pending withdrawal requests.

Failure to comply could lead to additional penalties, although the initial orders focus on immediate cessation and customer fund access. Those who've followed similar cases in other states note that such directives often result in platforms voluntarily restricting access rather than facing prolonged legal proceedings.

Conclusion

The September 2026 cease-and-desist orders represent Connecticut's direct response to the August federal court ruling on sports event contracts. By targeting the nine specific platforms and requiring fund withdrawal access, state officials have applied existing gambling regulations to prediction markets operating without licenses. The action reinforces the distinction between licensed sportsbooks and unlicensed platforms while addressing stated consumer protection priorities around youth and problem gambling. Regulators continue to monitor compliance as the affected companies adjust their operations in line with the directives.