Connecticut Widens Prediction-Market Crackdown as Underdog Sues
Prediction markets offer event contracts tied to sports outcomes and argue that federally regulated trading venues fall under the Commodity Futures Trading Commission’s exclusive authority. Connecticut treats those products as unlicensed sports wagering subject to state gaming and consumer-protection laws. The dispute matters beyond the platforms themselves because it tests whether federal commodities law preempts state restrictions and exposes the payment, app-distribution, identity-verification, sports-data and advertising networks supporting the business to regulatory scrutiny.
On Sept. 10, the Connecticut Department of Consumer Protection ordered Polymarket, Coinbase, Crypto.com, Gemini, Novig, ProphetX, Robinhood, Underdog Predict and Webull to immediately stop offering or promoting sports-event contracts to state residents. It also issued 29 subpoenas and told the platforms to allow customer withdrawals. On Sept. 15, Underdog sued Connecticut officials in federal court, seeking declaratory and injunctive relief and arguing that CFTC oversight preempts the state action. Britain’s IG Group agreed in July to buy Underdog for as much as $1.3 billion.
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The history behind this eventNYC Council Probes Prediction Markets Over Deceptive Marketing
Prediction markets let users trade event contracts tied to outcomes in sports, politics, culture and weather. The industry has expanded rapidly in New York City, while escaping some marketing restrictions and consumer safeguards that apply to casinos and online sports betting. That regulatory gap has sharpened concerns that platforms may present wagering as investing, target minors or young adults, and expose people prone to compulsive gambling to potentially addictive products.
New York City Council Speaker Julie Menin announced the investigation on Aug. 12, 2026, sending letters to Kalshi, Polymarket, Coinbase and Gemini Titan seeking details about advertising reaching New Yorkers. The Council plans a hearing and will examine allegations involving undisclosed influencer promotions, fictitious trades and videos portraying losing wagers as profitable. Council Member Harvey Epstein said prediction-market volume could reach $300 billion this year. The inquiry may lead to new legislation, enforcement, public education, health measures or funding for consumer protection.
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