Three Prediction Markets Left Connecticut. Ohio Just Sent Ten More Cease-and-Desist Letters.

Three prediction-market operators have stopped serving Connecticut residents, the state's Department of Consumer Protection confirmed this week, a month after Governor Ned Lamont's office sent cease-and-desist letters to nine companies accused of running unlicensed gambling. The same week, Ohio's Casino Control Commission issued letters to ten more platforms. A quiet exit in one state and an escalation in another together describe a national enforcement scramble over products that sit awkwardly between a derivatives exchange and a sportsbook.

Two states move, and the legal ground keeps shifting

Connecticut regulators argue the contracts are a form of wagering. Under state law, accepting bets requires a license limited to the casinos, the Connecticut Lottery Corporation and its partners. All nine companies were told to stop; Commissioner Bryan Cafferelli said Monday that three have left. "We will not tolerate illegal prediction market activity that preys upon the most vulnerable consumers," he said, according to CT Insider. Reporting identified the three as Webull, Gemini and ProphetX, though a prediction-market analyst publicly disputed whether ProphetX had actually withdrawn. Connecticut also filed a new suit against Kalshi in August after a judge ruled the exchange's sports markets are not exempt from state gambling law.

Ohio's letters went to Underdog, Gemini Titan, Coinbase, ProphetX, Novig, Robinhood Derivatives, Polymarket's US entity, Plus500US, Moomoo Financial and Webull Financial. They rest on a September 25 ruling by the Sixth US Circuit Court of Appeals in KalshiEx LLC v. Schuler, which the commission reads as holding that the Commodity Exchange Act neither covers these sports contracts nor preempts Ohio's gaming statute. The letters describe a contract on a game as a bet on which team wins and conclude each company "is operating online sports gaming" without a license — a felony in Ohio. Responses are due October 16.

The legal picture is not converging. On the same day Ohio's letters were dated, an Illinois federal judge sided with Kalshi and the CFTC, finding the contracts are likely swaps under federal law and blocking a state ban. Michigan barred Kalshi's sports wagers in September with a $500,000 daily fine. Kalshi and Polymarket have spent roughly $3 million lobbying states on the rules, even as football season pushes trading volume to records.

The harm side of the ledger

The enforcement fight is running ahead of the treatment system that would absorb the damage. In Texas, which sets aside no public funding for problem gambling, therapists told The Dallas Morning News that demand is climbing alongside the spread of prediction-market apps — which, unlike sportsbooks, are open to users as young as 18. One national provider says clients now mention prediction markets twice as often in intake assessments as a year ago.

Clinical evidence at the state level is still thin, but not absent. A study of Ontario's 2022 legalization of single-event online betting, published in the American Journal of Preventive Medicine, found emergency department visits for gambling disorders ran 154% above projections, concentrated among men aged 10 to 44 and frequently accompanied by depression and suicidality. That is a warning about what a frictionless product can do at population scale — and the states now writing cease-and-desist letters are the ones deciding whether it arrives.

What the crackdown does not resolve is where people already harmed will go. For those needing more than an app's removal, the evidence base remains structured treatment, including cognitive behavioral therapy and specialized programs for gambling addiction. In Texas, by one certification organization's count, only five therapists are trained under best practices — Florida has twice as many — a gap that no cease-and-desist order closes.