Your trading app just got a cease-and-desist letter, and it wasn't about stocks. In the span of eight days in September 2026, two states ordered some of the best-known retail brokers in the country, including Robinhood, Webull and Coinbase, to stop offering sports-event contracts to their residents. The message from state regulators was simple: a bet on a game is a bet, even if it sits inside a brokerage app.
What happened
Connecticut, September 10, 2026
Governor Ned Lamont announced that Connecticut's Department of Consumer Protection (DCP) had issued cease-and-desist orders to nine platforms: Polymarket, Coinbase, Crypto.com, Robinhood, ProphetX, Novig, Webull, Gemini and Underdog Predict. According to the state and coverage by WSHU:
- The DCP said the products constitute unlicensed sports wagering under Connecticut law, regardless of how operators classify them under federal law.
- The orders direct the companies to immediately stop advertising, promoting or offering sports event contracts in the state, and to let Connecticut customers withdraw funds held on the platforms.
- The state also issued nearly 30 subpoenas to gaming service providers, including payment processors, app stores, identity-verification providers, sports-data businesses and media organizations.
- Non-compliance could bring civil penalties under the Connecticut Unfair Trade Practices Act or criminal penalties under state gaming law.
Missouri, September 18, 2026
Missouri Attorney General Catherine Hanaway sent cease-and-desist letters to six companies: Polymarket, Kalshi, Crypto.com, Novig, Underdog and Robinhood. According to the AG's office and ABC17:
- Each company got 30 days to comply with Missouri law.
- Anyone offering sports wagering in Missouri must be licensed by the Missouri Gaming Commission, pay required taxes and fees, and ensure no one under 21 can bet.
- The AG's office alleged that five of the six, Polymarket, Kalshi, Crypto.com, Underdog and Robinhood, either permit underage users or lack adequate safeguards to keep Missourians under 21 out. Novig was not cited on age verification.
Hanaway openly expected a court fight: "Chances are they may sue us once they get this cease-and-desist letter," she said, as quoted in local coverage. A Robinhood spokesperson said its event contracts are federally regulated, according to the Fulton Sun and other outlets.
Why traders should care
Many of our readers hold accounts at the same brokers named in these letters. When a state regulator orders a broker to stop offering a product and to let customers withdraw funds, that's a reminder that product menus are not permanent. It also shows how prediction markets have moved from niche crypto sites into mainstream trading apps, and how that move brings mainstream brokers into gambling-law fights they may not have expected.
The age issue is the sharpest edge. Missouri's sports-wagering framework, as described by the AG's office, requires operators to ensure no one under 21 can bet. Missouri's letters allege that several platforms don't reliably meet that standard. That is an allegation, not a finding, but it is the kind of claim that tends to resonate with courts and legislators.
The controversy: both sides
The platforms' view: event contracts on CFTC-registered venues are federal products. Robinhood's response to Missouri, that its contracts are federally regulated, captures the industry position. The Third Circuit agreed with Kalshi on a similar question earlier in 2026.
The states' view: the products are sports bets with a financial wrapper. Two federal appeals courts, the Ninth Circuit in August and the Sixth Circuit on September 25, 2026, have sided with states on that core question, which likely emboldened more state action.
Our take
Our take: Brokers chased sports contracts because they are sticky and they bring young users in the door. That's fine as a business strategy. But when your pitch is "we're a regulated financial firm, not a sportsbook," and a state alleges you can't keep 20-year-olds out of football bets, you've handed critics the perfect headline. The industry would be in a stronger position if it adopted 21-plus age gates for sports contracts voluntarily, before a court forces it to.
The uncomfortable question: if your broker is willing to fight two states to keep sports contracts in the app, how much of its growth now depends on them?
What traders should do (general, not advice)
- If you live in Connecticut or Missouri, watch for notices from your broker about product availability and fund withdrawals.
- Don't park trading capital in a product whose legality in your state is being contested.
- Remember that state actions can move faster than federal court appeals.
Key takeaways
- Connecticut (Sept. 10, 2026) ordered nine platforms, including Robinhood, Webull, Coinbase and Gemini, to stop offering sports contracts and issued nearly 30 subpoenas to service providers.
- Missouri (Sept. 18, 2026) gave six platforms, including Robinhood and Kalshi, 30 days to stop, alleging weak under-21 safeguards at five of them.
- Robinhood says its event contracts are federally regulated.
- Recent appeals rulings in the Ninth and Sixth Circuits favor the states' view.
- Our view: voluntary 21-plus age gates would be smarter than waiting for courts.
Put the research to work on your Desk
Explore the tools behind the research, compare the available access, or open your Desk if you already have an account.
FAQ
Which brokers got Connecticut's cease-and-desist orders?
Polymarket, Coinbase, Crypto.com, Robinhood, ProphetX, Novig, Webull, Gemini and Underdog Predict, announced September 10, 2026.
What did Missouri's attorney general demand?
On September 18, 2026, AG Catherine Hanaway gave Polymarket, Kalshi, Crypto.com, Novig, Underdog and Robinhood 30 days to stop offering sports event contracts, alleging five lacked adequate under-21 safeguards.
How did Robinhood respond?
A Robinhood spokesperson said its event contracts are federally regulated.
Loomi.Ai provides educational market research, not financial advice. Trading futures and options involves substantial risk of loss, and backtested results are historical and do not guarantee future returns.
Sources
- Governor Lamont Announces New Actions Against Illegal Prediction Markets Offering Sports Wagers in Connecticut, State of Connecticut
- CT sends cease-and-desist orders to 9 prediction markets, WSHU
- Missouri Attorney General Hanaway Orders Unlicensed Prediction Markets To Cease And Desist Unlawful Sports Wagering, Missouri Attorney General's Office
- Missouri AG issues cease-and-desist orders to six prediction markets, ABC17 News
- Missouri AG orders Kalshi, Polymarket to stop operating prediction markets here, Fulton Sun
- Connecticut Targets Prediction Markets' Distribution Stack, PYMNTS