Connecticut Issues Cease and Desists to Major Prediction Platforms

Kalshi immediately pushed back by arguing that its markets fall under exclusive CFTC oversight. The crackdown now adds to a growing wave of state-level legal actions across the country. At the same time, Fanatics is pushing forward with a major entry into the prediction market space through a new Crypto.com-powered platform, Fanatics Markets. Despite the rising regulatory pressure, investor interest and corporate expansion suggest the prediction market sector is accelerating rather than slowing down.

Connecticut Slams Prediction Markets

Connecticut escalated its crackdown on prediction markets by issuing cease-and-desist orders to Robinhood, Kalshi and Crypto.com, accusing all three platforms of facilitating unlicensed sports betting through their event-contract offerings. The state’s Department of Consumer Protection (DCP) said on Wednesday that the companies were effectively conducting online gambling without authorization and offering wagers that violate several state laws, including the prohibition on betting by individuals under 21.

DCP Commissioner Bryan Cafferelli said none of the targeted platforms hold the required sports wagering license in Connecticut and argued that their event-contract markets go far beyond what state law permits. Regulators also criticized the firms for allegedly presenting their services as legal when they are not. 

DCP Gaming Director Kris Gilman said the platforms operate outside the state’s regulatory safeguards, which exposes users to risks ranging from loss of funds to the misuse of personal data. According to the agency, unlicensed prediction markets also lack proper integrity controls, opening the door to insider betting, manipulation, and wagers on events where outcomes may already be known.

Kalshi pushed back immediately by arguing that Connecticut has no authority to regulate its markets at all. A spokesperson said that Kalshi is a federally regulated exchange that is supervised exclusively by the Commodity Futures Trading Commission, placing it under federal rather than state jurisdiction. In a lawsuit that was filed on the same day, Kalshi claimed Connecticut’s actions directly interfere with a federal regulatory framework that Congress designed specifically for derivatives markets. The company insists its sports-related event contracts are legal under federal law.

Connecticut’s move now adds to the growing list of states taking action against prediction platforms during a boom in event-based trading volumes and rising mainstream visibility. New York and Massachusetts both recently pursued legal action against Kalshi, while Arizona, Illinois, Montana and Ohio issued their own cease-and-desist orders earlier this year. The company is also fighting ongoing cases in New Jersey, Maryland and Nevada. 

Despite the mounting regulatory battles, Kalshi recently closed a massive $1 billion funding round at an $11 billion valuation, following record trading activity in November. This is a clear sign that investor interest in prediction markets is still extremely high despite the state-level scrutiny.

Fanatics Launches New Prediction Market

Fanatics is also not deterred by the scrutiny, and entered the prediction market space through a new partnership with Crypto.com, launching a platform called Fanatics Markets that will allow users to trade contracts tied to real-world events. 

The move places the sports apparel giant alongside major industry players Polymarket and Kalshi. According to Wednesday’s announcement, the platform will roll out in two phases. The first phase, which is live now, offers prediction markets focused on sports, finance, economics, and politics. A second phase is scheduled for early next year and will expand into categories like crypto, stocks and IPOs, climate, pop culture, technology and AI, movies, and music.

Crypto.com has been actively building its footprint in the prediction market ecosystem, and will power the platform through its North America derivatives subsidiary, CDNA. CDNA is registered with the Commodity Futures Trading Commission and will serve as both the exchange and clearinghouse for Fanatics Markets. 

Travis McGhee, head of predictions at Crypto.com, said that the partnership is part of the company’s growing reach and commitment to offering safe and compliant prediction tools. Crypto.com also previously announced similar collaborations with Truth Social and MyPrize.

The launch arrives during a time of expansion for prediction markets. Polymarket and Kalshi recorded close to $10 billion in combined volume in November, which made it their strongest month to date. Polymarket also began rolling out its US app access this week, which could lead to even more momentum in the sector. Fanatics Markets will initially be available in ten states including Alaska, Delaware, Hawaii, and Utah, with additional states expected to go live.

Monthly volumes for prediction markets (Source: Token Terminal)

Fanatics generated $8.1 billion in revenue in 2024 and holds major apparel licenses across leading sports leagues. It has been steadily expanding beyond merchandise into collectibles and gaming. Matt King, CEO of Fanatics Betting and Gaming, said the new platform fits in perfectly with the company’s long-standing mission to give fans new ways to engage with the sports and cultural moments they care about.