HARTFORD — The state Department of Consumer Protection Gaming Division Dec. 3 issued cease and desist orders to three platforms conducting unlicensed online sports gambling.
In letters sent to KalshiEX LLC, Robinhood Derivatives, LLC and Crypto.com from the state Director of Gaming Kristofer Gilman dated Dec. 2, the department charged the platforms allow users to purchase contracts based on their belief that a particular sport outcome will occur, such as a specific team winning a game, division, or championship.
The user is paid based on the outcome of the sporting event and not based on the occurrence or nonoccurrence of such event. These Contracts constitute sports wagering because they allow Connecticut residents to risk something of value for gain by an electronic wagering platform through the placement of wagers on the outcome of live sporting events or portions of a live sporting event including future events.
The department also alleges that the three platform’s promotion of unlicensed and illegal gambling services is also an unfair trade practice, which violates Connecticut Unfair Trade Practices Act.
“Not only are Robinhood’s actions deceptive, they are also unfair in that Robinhood, by operating outside of the regulatory environment, is able to gain a competitive advantage over appropriately licensed entities,” according to the letter sent to Robinhood.
“Only licensed entities may offer sports wagering in the state of Connecticut,” said DCP Commissioner Bryan T. Cafferelli. “None of these entities possess a license to offer wagering in our state, and even if they did, their contracts violate numerous other state laws and policies, including offering wagers to individuals under the age of 21.”
“These platforms are deceptively advertising that their services are legal, but our laws are clear,” said Gilman. “They are also operating outside of a regulatory environment, posing a serious risk to consumers who may not realize wagers placed on these illegal platforms offer no protections for their money or information. A prediction market wager is not an investment.”
The three legal sports betting platforms in Connecticut are:
- DraftKings Sportsbook, partnered with the Mashantucket Pequot Tribe.
- FanDuel Sportsbook, partnered with the Mohegan Tribe.
- Fanatics Sportsbook (formerly SugarHouse), partnered with the Connecticut Lottery.
Prediction Market Platforms offering “Sports Events Contracts” are illegal and put consumers money and information at risk, according to the Department of Gaming.
They are not required to adhere to Connecticut’s technical standards for wagering platforms, leaving your financial and personal information vulnerable.
The department points out how such platforms can harm consumers financially.
- There are no integrity controls in place for these platforms. That means there is nothing to prevent participants or insiders from placing wagers on events or impacting the outcome of an event. Regulated operators are required to have controls in place to prohibit known insiders from placing wagers, and to monitor and report suspicious wagers.
- House rules, which govern the settlements of all wagers, are not reviewed by any regulator. Wagers offered on these platforms are not regulated, which means you might not get your winnings as advertised.
- If an issue arises, such as a wager not paying out as advertised, there is no recourse for the Department of Consumer Protection to recover lost funds for consumers.
- These platforms offer wagers on events where the outcome is known by many people, such as award shows, professional team trades, and other events. This means insiders with special knowledge of an event can place bets on the outcome they already know. Wagers on events with known outcomes are prohibited in Connecticut because they are unfair to consumers without insider knowledge.
- These platforms advertise to individuals on the Voluntary Self-Exclusion List, and on college campuses, which is illegal in Connecticut.
- They offer wagers to individuals on the Voluntary Self-Exclusion List and to individuals under 21.
All three platforms are ordered to immediately cease and desist advertising, offering, promoting, or otherwise making available “sports event contracts” or any other form of unlicensed online gambling to Connecticut residents. DCP also ordered all three platforms to allow Connecticut residents to withdraw any funds currently held by the platforms.
Failure to comply may result in additional action including, but not limited to, civil penalties under the Connecticut Unfair Trade Practices Act and/or criminal penalties for violations of Connecticut’s gaming statutes.
Consumers can report gaming-related concerns to DCP by emailing DCP.Gaming@ct.gov.
