Connecticut Governor Ned Lamont Targets Prediction Markets in Wake of Sports Wagering Crackdown

In a bold move that signals growing concern over the intersection of prediction markets and sports wagering, Connecticut Governor Ned Lamont has unveiled legislation aimed at tightening oversight of these increasingly popular platforms. The proposed bill, submitted directly to the General Law Committee at the start of the 2026 legislative session, comes on the heels of state regulators’ recent enforcement actions against companies accused of operating unlicensed sports betting operations.

A Direct Response to Regulatory Challenges

Governor’s Bill No. 5038 represents a comprehensive approach to regulating prediction markets in Connecticut. The legislation arrives at a critical juncture, following the state’s Department of Consumer Protection issuing cease-and-desist orders to major platforms including Kalshi, Robinhood, and Crypto.com for what regulators characterized as unlicensed sports wagering activities.

The timing is particularly significant. Just months after these enforcement actions, Lamont’s proposal demonstrates the state’s determination to establish clear boundaries between legitimate prediction markets and activities that cross into regulated gambling territory. The bill explicitly carves out exemptions for traditional sports betting, online casino gaming, internet games, and conventional securities or commodities trading, focusing specifically on prediction market platforms that operate through bid-ask systems.

Age Restrictions and User Verification

At the heart of the proposed legislation is a strict age requirement that would prohibit anyone under 21 from accessing prediction market platforms or viewing targeted advertisements. This represents a significant departure from current practices, where many platforms allow users as young as 18 to participate.

The bill mandates robust age verification procedures, requiring platforms to confirm both the user’s age and physical location within Connecticut before allowing account registration or the placement of any speculative positions. This dual verification system aims to prevent both underage access and out-of-state participation, addressing concerns about jurisdictional enforcement.

For platforms that inadvertently allow underage users, the consequences would be immediate and severe. Companies would be required to suspend the offending account, close all active positions, return any deposited funds, and implement permanent blocks preventing the user from returning until reaching the legal age of 21.

Comprehensive Advertising Restrictions

The advertising provisions in Lamont’s bill represent some of the most stringent regulations proposed for the prediction market industry. All advertisements would be required to prominently display the minimum age requirement of 21, ensuring that potential users are immediately aware of the age restrictions.

Perhaps most notably, the legislation would prohibit any form of direct or targeted advertising to individuals under 21, including email marketing and text message campaigns. These restrictions extend to the content of advertisements themselves, banning imagery, language, or endorsements specifically designed to appeal to younger audiences.

The bill also targets advertising on college campuses and in locations where younger populations congregate. Additionally, any promotional materials containing misleading information intended to encourage participation would be strictly prohibited, addressing concerns about predatory marketing practices in the prediction market space.

Enforcement and Penalties

Connecticut’s proposed legislation establishes a robust enforcement framework with significant financial penalties for non-compliance. The state’s attorney general would be empowered to pursue civil penalties of up to $10,000 per violation, with persistent or repeated violations potentially resulting in fines of up to $50,000 each.

This graduated penalty structure reflects the seriousness with which the state views violations of the proposed regulations. The substantial fines serve as both a deterrent to non-compliance and a mechanism for ensuring that platforms take their regulatory obligations seriously.

The Department of Consumer Protection would be tasked with developing detailed regulations to implement the law’s provisions, ensuring that the legislative framework translates into practical, enforceable standards for the industry.

Research and Future Oversight

Looking beyond immediate regulatory concerns, Governor Lamont’s bill includes provisions for comprehensive research into the impact of prediction markets on Connecticut residents. Beginning July 1, 2026, the state would conduct an extensive study examining several critical areas:

The research would investigate underage usage patterns, assessing how effectively current age verification systems prevent minors from accessing these platforms. It would also examine exposure to advertising, particularly among vulnerable populations, and analyze the relationship between prediction market participation and problem gambling behaviors.

Additionally, the study would evaluate the economic impact of prediction markets on the state’s traditional wagering revenue streams, providing policymakers with data-driven insights to inform future regulatory decisions. A comprehensive report detailing the findings would be due to the General Assembly by February 1, 2027.

Industry Context and Broader Implications

The introduction of this legislation reflects broader tensions within the rapidly evolving prediction market industry. As these platforms have expanded beyond traditional topics like elections and economic indicators to include sports-related contracts, they have increasingly found themselves in regulatory gray areas that state officials are now working to clarify.

Connecticut’s approach represents a middle ground between complete prohibition and unregulated operation. By establishing clear age restrictions, advertising guidelines, and enforcement mechanisms, the state aims to create a framework that allows legitimate prediction market activities while preventing their use as vehicles for unlicensed gambling.

The bill’s provisions would take effect on July 1, 2027, providing platforms with a transition period to adapt their operations to comply with the new requirements. This timeline suggests that Connecticut officials view this as a carefully considered regulatory evolution rather than an emergency response to immediate concerns.

Political and Economic Considerations

Governor Lamont’s proposal arrives at a politically sensitive moment for Connecticut’s gaming and wagering industry. The state has invested significant resources in developing its regulated sports betting market, and the emergence of prediction platforms offering sports-related contracts has created competitive tensions and regulatory challenges.

By distinguishing between licensed sports wagering and prediction markets while establishing strict oversight for the latter, the legislation attempts to protect the state’s existing gaming revenue while acknowledging the growing popularity of alternative wagering mechanisms. This balancing act reflects the complex political calculations involved in modern gambling regulation.

The research provisions included in the bill also suggest a commitment to evidence-based policymaking, with the state willing to adjust its approach based on empirical data about how prediction markets actually affect Connecticut residents and the broader economy.

Looking Forward

As Connecticut moves forward with this legislation, it will likely serve as a model for other states grappling with similar regulatory challenges. The comprehensive nature of Governor Lamont’s proposal, addressing age restrictions, advertising practices, enforcement mechanisms, and ongoing research, provides a template for how states might approach the regulation of this emerging industry.

The success or failure of this legislation could have ripple effects throughout the prediction market industry, potentially influencing how platforms operate across multiple jurisdictions. As the regulatory landscape continues to evolve, Connecticut’s experiment with comprehensive prediction market oversight will be closely watched by industry participants, regulators, and policymakers nationwide.

The bill represents not just a response to immediate enforcement actions, but a forward-looking attempt to establish sustainable regulatory frameworks for an industry that shows no signs of slowing its growth. Whether this approach strikes the right balance between innovation and protection remains to be seen, but Connecticut has clearly signaled its intention to play a leading role in shaping the future of prediction market regulation.

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