Connecticut Cracks Down on Nine Prediction Market Platforms

Connecticut regulators have taken major action against the prediction market industry, sending cease-and-desist orders to nine companies. The list includes Polymarket, Robinhood, and Coinbase.

State officials claim these platforms are offering sports betting without proper Connecticut authority, escalating the ongoing battle over how prediction markets should be regulated nationwide.

The Crackdown: Who Got Hit and Why

The Connecticut Department of Consumer Protection named nine companies in its cease-and-desist orders: Polymarket, Coinbase, Crypto.com, Robinhood, ProphetX, Novig, Webull, Gemini, and Underdog Predict. None of the companies responded to requests for comment.

DCP Commissioner Bryan Cafferelli announced the action during a press conference at the Fanatics Sportsbook inside Hartford’s PeoplesBank Arena.

The location helped make the state’s position clear. Connecticut officials argue that prediction markets offering sports contracts are essentially sportsbooks and should need a state license to operate.

Cafferelli also accused the platforms of using financial terms such as “trading,” “market risk,” and “financial strategy.” He argued that this language can make consumers believe they are investing instead of gambling.

How Prediction Markets Work, and Why States Are Pushing Back

Prediction markets allow users to buy and sell contracts based on whether an event will happen. Those events can range from the outcome of a football game to a presidential election.

They work differently from traditional sportsbooks. Sportsbooks use oddsmakers to create betting lines and odds. Prediction markets instead allow users to trade contracts with each other. The platforms generally make money by charging fees on those trades.

That difference is a major part of the battle in the courts.

Prediction market companies argue that their contracts are financial products rather than traditional gambling. Connecticut officials strongly disagree.

Cafferelli said the platforms are “indistinguishable from sports wagering.” State regulators also argue that prediction markets do not provide the same consumer protections required from regulated Connecticut sportsbooks.

Serious Consumer Protection Allegations

Connecticut regulators also raised concerns beyond licensing.

Cafferelli claimed the platforms allow underage users to participate. In May, Connecticut reported over 200 suspected underage gambling cases, using the accounts of their parents.

He also alleged that some companies advertise to people who have joined Connecticut’s voluntary gambling self-exclusion list.

Around 10,000 people are reportedly on that list after choosing to block themselves from regulated gambling platforms.

If proven, those allegations could raise serious responsible gambling concerns.

Regulated sportsbooks such as DraftKings, FanDuel, and Fanatics must follow Connecticut rules covering advertising and consumer protection. They also operate under direct oversight from the DCP.

Connecticut officials argue that prediction markets have been able to avoid many of those state-level requirements.

Connecticut’s Regulated Sports Betting Landscape

Connecticut has a tightly regulated sports betting market.

Fanatics operates through a partnership with the Connecticut Lottery Corporation. DraftKings is the sportsbook partner of Foxwoods Resort Casino, while FanDuel operates with Mohegan Sun.

All three operators are regulated and subject to DCP oversight.

Prediction markets are different because they fall under federal oversight through the Commodity Futures Trading Commission (CFTC).

That difference has created a major dispute between states and prediction market companies. Connecticut officials believe the federal system has allowed these platforms to operate without the consumer protections required at the state level.

Connecticut has not created a separate regulatory system for prediction markets.

What’s Next

Connecticut’s cease-and-desist orders represent a major state-level challenge to prediction market platforms.

However, the larger fight is far from over. Courts, lawmakers, state regulators, and federal officials continue to debate whether sports prediction contracts should be treated as financial products or sports betting.

The involvement of major companies such as Robinhood and Coinbase could bring even more attention to the issue.

The next step could be clearer federal guidance from the CFTC, more battles in court, or similar enforcement actions from other states.

Connecticut’s crackdown could provide a roadmap for other states that want to take a tougher approach to sports prediction markets.