States Double Down on Enforcement Against Unlicensed Sports Betting
20 September 2026
State regulators are sharply escalating enforcement against unlicensed sports betting apps and prediction markets, citing a wave of consumer complaints, underage access, and violations of sports betting and fairness laws. In Connecticut, regulators this week announced a sweeping crackdown with nine cease-and-desist orders to major platforms allegedly offering illegal wagers to state residents.
Connecticut's latest action is the latest in a string of moves by regulators in states nationwide. Missouri recently issued letters to six unlicensed betting companies, while Tennessee's Sports Wagering Council shut down a major offshore sportsbook after serving 30 legal threats. Arizona regulators publicly warned six unlicensed casino and betting operators in April. The total tally of affected states now has reached eleven.
In Connecticut, Governor Ned Lamont launched an offensive against platforms like Polymarket, Robinhood, and others that had failed to meet the state's strict guidance for accepting bets. He ordered the companies to immediately stop all advertising, offering, or promotion of "sports event contracts" within state borders. The companies must also now allow Connecticut residents to withdraw any funds they hold, per the new guidance.
Prior actions in Connecticut had taken an aggressive stance by requesting federal court injunctions to immediately shut down unlicensed sportsbook platforms within the state. This latest wave, however, goes a step further: instead of singling out just one or two key companies, the state is now issuing coordinated demands to some of the largest market prediction platforms in the industry.
Enforcement Goals and Subpoenas
Bryan Cafferelli, the Connecticut Department of Consumer Protection Commissioner, said the big-picture goal is strictly enforcing the state's sports betting laws and keeping unlicensed operators at bay. "Sports betting is a strictly regulated industry in CT, and requires all players, including sportsbooks, casino operators and media outlets to follow our state's consumer protections and technical operating standards. We will pursue all paths to ensure no one abuses our consumers or wagering laws."
To that end, Connecticut also issued nearly 30 subpoenas to gaming service providers and media organizations, to collect any information they have on the unlicensed bets being made. The organizations were not themselves deemed to be under investigation, for now.
The Connecticut action names well-known platforms including Polymarket, Coinbase's Betdex, Navers Underdog, and Crypto.com. Not all are strictly focused on sports: for example, Navers Underdog offers hundreds of sports and entertainment markets, while Betdex is a horse-racing prediction platform. Coinbase's offering was even wider yet, including categories from pop culture to politics to memes.
The state said the platforms had violated not just Connecticut's specific gambling laws, but also the wider state principles of unfair trade practices. Moreover, they had also failed to implement strict controls to prevent gamblers under 21, or any others on the state's "voluntary self-exclusion" list, from placing bets.
Consumer Protection Focus
Regulators also called out some platforms for making bets on sports played by college teams based in Connecticut, which is not allowed state-wide. That addition marked a careful re-alignment of sports betting law with the core philosophy of ensuring strong guardrails are in place to prevent gambling harms.
Consumer protection was the driving force behind the governor's action. Lamont argued that widespread unlicensed sports betting operations, like those in the prediction markets targeted in the September 2023 order, pose a grave risk to every resident. He cited concerns over consumers' funds being at risk if not managed by properly regulated entities with accountable procedures.
Furthermore, Lamont tied the crackdown explicitly to his pledge earlier this year to address gambling addiction and consumer risk, and associated the enforcement with the recently passed "Protect Connecticut Act," which imposed new restrictions on unlicensed gambling.
Industry Response and Legal Landscape
Indeed, the Connecticut waiver sparked action from consumer advocates. The National Council on Problem Gambling welcomed the state's efforts, saying they expect the enforcement to serve as an important safeguard. Their research shows that people who gamble through unlicensed online and off-shore platforms are two to three times more likely to become addicted.
When asked about the crackdown, the platforms emphasized their commitment to compliance. "We are committed to abiding by all applicable state laws, including those in Connecticut, and will work with officials to ensure compliance with their requirements," one company said in a statement. No platform disputed the order on the facts.
In a call to lawmakers, Lamont hinted that both civil and criminal penalties may yet follow if the nine companies do not comply with the standards within the specified withdrawal window. "The CT Unfair Trade Practices Act and CT Gaming statutes both provide stiff penalties for those who continue to violate consumer protections and bypass our state's licensing process requirements."
The enforcement pattern is now spreading across the broader gambling landscape. In recent weeks, regulators from Missouri to Tennessee to Arizona have emphasized a similarly tough stance to limit unlicensed sports wagers. In Tennessee, authorities reported they have sent cease-and-desist letters to 30 groups, fining them more than $1,250,000 and driving out nine operators over just the past year.
Missouri's Attorney General focused her September letter specifically on sports "event contracts," arguing they are the rare type of contracts used specifically for sports wagers. The top prosecutor said her office will maintain age verification mechanisms to ensure no Missourian under 21 bets illegally through unlicensed platforms.
National Trends and Future Outlook
Regulators in Arizona and Michigan have long followed the enforcement trend and targeted dozens of unlicensed online casino operators since April. And last spring, eleven states across the US issued cease-and-desist orders or legal actions against unlicensed betting or prediction platforms, according to the bipartisan Multistate Insider policy site.
With sports betting no longer a niche market, and with overall sports gambling revenue reaching $12.3 billion in 2023 (up from $6.7 billion in 2022, says the American Gaming Association), states are taking a firm stance on limiting problematic gambling behavior through formal operating policies. Advocates continue to watch for more state-level actions, as regulators dive deeper into enforcement through detailed requests for documents and thorough compliance reviews.
One key consideration will be whether federal regulators will interfere with illegal gambling oversight. In August, a Connecticut federal court ruled that "sports event contracts" are not protected as commodities investments under the federal Commodity Exchange Act, rather they count as unlicensed gambling wagers.
That highlights how legal classifications influence regulators who are expanding their enforcement efforts. Connecticut's officials have called for federal court actions to block future illegal gambling. Such cases could further define whether these sports wagers should be seen as legal, or what they need to do to become legitimate.
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