Robinhood shares rise despite Connecticut cease-and-desist order

Robinhood Markets Inc. stock traded higher in recent sessions, closing Thursday at $137.08 per share, up 2.57%, despite Connecticut regulators issuing a cease-and-desist order related to the company’s prediction market operations, according to market data.

The Connecticut Department of Consumer Protection issued orders to Robinhood Derivatives, KalshiEX LLC, and Crypto.com, stating the platforms offered sports event contracts without proper licensing, according to letters from the department.

The state said the companies lacked approval to operate sports wagering services and emphasized that any form of sports wagering requires a license under state law.

“Only licensed entities may offer sports wagering in the state of Connecticut,” DCP commissioner Bryan T. Cafferelli said in a statement on Wednesday. “None of these entities possess a license to offer wagering in our state, and even if they did, their contacts violate numerous other state laws and policies, including offering wagers to individuals under the age of 21.”

Robinhood shares gain

Robinhood’s valuation metrics rose as trading volume remained high, market data showed. Ark Invest recently added Robinhood shares to one of its exchange-traded funds, according to the firm’s disclosures.

The company’s platform now offers trading in stocks, options, and major cryptocurrencies. Digital asset activity has contributed to overall platform usage as the company expands services providing access to both equities and cryptocurrency markets, according to company information.

Connecticut regulators stated the contracts offered by the platforms did not comply with state laws and could be accessible to individuals below the legal wagering age. Officials raised concerns about potential exposure to individuals on the state’s Voluntary Self-Exclusion List, which prohibits gambling promotion to registered users.

It’s not just Connecticut

Nevada, New Jersey, and others are trying to block online prediction markets, citing lost revenue for state-authorized gambling entities like casinos.

But firms such as Kalshi argue their operations fall under federal law governing derivatives on designated exchanges and have filed lawsuits to defend their right to operate, with a spokesperson noting the company is “very different from what state-regulated sportsbooks and casinos offer.”

The legal battles add to a growing list of challenges for prediction market providers, including opposition from Native American tribes protecting tribal gaming interests. Despite the regulatory turmoil, the business continues to thrive: Kalshi recently raised $1 billion at an $11 billion valuation, just weeks after a separate round valued the company at $5 billion.

In a separate statement, Robinhood described itself as a financial technology company rather than a banking institution, noting that banking services are provided through a partner bank that maintains Federal Deposit Insurance Corporation membership. The company issued the clarification to explain how customer deposits are handled through its partner bank arrangement.