Connecticut Targets Robinhood and Crypto Platforms
Connecticut sends cease and desist orders to Robinhood, Crypto.com, and Kalshi over unlicensed sports betting claims.
- Robinhood, Crypto.com, and Kalshi receive cease and desist orders.
- Connecticut accuses platforms of unlicensed sports betting.
- Event contracts allegedly violate state gambling laws.
Connecticut regulators have taken aim at major trading platforms—Robinhood, Crypto.com, and Kalshi—by issuing cease and desist orders, accusing them of offering unlicensed sports betting through event-based contracts. These contracts, which allow users to speculate on real-world outcomes like elections or sports results, have raised regulatory concerns in the state.
The Connecticut Department of Consumer Protection (DCP) argues that these platforms are effectively offering gambling services without proper authorization. According to the DCP, event contracts fall under the legal definition of sports wagering in the state, and any operator wishing to provide such services must first obtain a gaming license.
Robinhood and Kalshi Under Scrutiny
Robinhood, typically known for stock and crypto trading, recently introduced event contracts that let users bet on future events. Kalshi, a platform that specializes in this kind of trading, has been in the regulatory crosshairs before—particularly with the Commodity Futures Trading Commission (CFTC). Now, Connecticut has joined in, calling these contracts a form of illegal gambling.
Crypto.com, primarily a cryptocurrency exchange, is also under scrutiny for similar reasons. The state contends that even though these platforms present the activity as trading or investing, the core mechanics resemble traditional sports betting and should be regulated as such.
Legal Grey Areas Around Event-Based Markets
The crackdown highlights a growing legal grey area in financial markets: the classification of event contracts. While some argue these are predictive tools for market sentiment, others, like Connecticut regulators, see them as a backdoor into unregulated gambling.
This action could set a precedent for other states, prompting similar enforcement against platforms offering event-based products. Companies in the crypto and trading space may need to reassess their offerings to avoid further legal challenges.
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