Report Says Gemini, Prophet X, WeBull Have Restricted Trading in Connecticut

A news report states that prediction market exchange platforms Gemini, ProphetX, and WeBull have restricted their offerings for people in Connecticut. The report follows Connecticut consumer protection officials' transmission of cease-and-desist orders to the operators of several exchanges, including all three aforementioned companies.

Litigation is ongoing that could open a path back into Connecticut for the operators. Connecticut authorities have not disclosed whether they intend to pursue any enforcement actions against non-compliant exchanges.

Gemini, ProphetX, WeBull take cautious approach in Connecticut

According to Ken Dixon of CT Insider, Gemini, ProphetX, and WeBull "have stopped operating their sports prediction market services in Connecticut." The report does not mention restrictions on other categories of markets that may be in place for Connecticut users.

https://x.com/MickBransfield/status/2107523673561120920

The restriction applies to sports event contract markets because it was that activity which the Connecticut Department of Consumer Protection (CDCP) targeted in cessation demands in September. The CDCP oversees regulated gambling in the state.

In that correspondence, the CDCP told the operators of nine exchanges that they were violating Connecticut's gambling laws by offering sports event contracts. The letters demanded that the recipients stop offering trading of such markets to people in Connecticut and refrain from advertising those markets to Connecticut residents and visitors as well.

Gemini, ProphetX, and WeBull may have complied with those demands, at least in part. Court orders may restore Connecticuters' access to sports markets on the exchanges, though.

Exchanges awaiting decisions from Second Circuit, other courts

Connecticut officials like Attorney General William Tong are involved in multiple civil lawsuits as both complainants and defendants.

• Coinbase and Kalshi have sued Tong and other officials, seeking court orders blocking authorities from enforcing the state's gambling laws

• The United States Commodity Futures Trading Commission (CFTC) and Department of Justice have sued Connecticut on federal preemption grounds

• Tong has sued Kalshi, seeking a court order that would prevent sports event contract trading and impose fines

The most advanced of the four cases at this time is Kalshi's complaint against the CDCP and others. The US District Court for the District of Connecticut denied Kalshi's request for a preliminary injunction and that decision is on appeal to the US Second Circuit Court of Appeals.

Parties are awaiting developments at the district court level in the other three cases. A loss for Tong, favorable rulings for Coinbase/the CFTC, or a reversal by the Second Circuit might give Gemini, ProphetX, and WeBull confidence to remove the restriction on sports event contracts in Connecticut.

The other six recipients of the September letters are likely watching these events unfold.

Remaining recipients could face further enforcement actions

Connecticut officials have made no statements as to the status of the six other targets of their cessation demands.

• Coinbase

• Crypto.com

• Novig

• Polymarket

• Robinhood

• Underdog Predict

Connecticut law gives the CDCP authority to recommend fines for offenders of the state's gambling laws and regulations. Tong would be in charge of actually imposing those fines or pursuing any criminal proceedings as the state's highest law enforcement official.

Favorable court rulings for Connecticut/Tong may result in him moving forward in those regards. In that event, recipients of these demands that complied could avoid harsher penalties.

Until courts issue more permanently effective rulings, exchanges have to determine whether to hedge against unfavorable decisions by complying with the CDCP's order. Gemini, ProphetX, and WeBull have made that move.