Age restrictions and certain advertising prohibitions for prediction markets could be introduced under a new bill in Connecticut, House Bill 5038 (HB 5038).
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What HB 5038 proposes and who it regulates
The HB 5038 defines a prediction market platform as any service that allows consumers to open speculative positions on future events in a supply and demand format. Under this definition, all platforms operating within the state would be required to implement age verification systems confirming that the user is at least 21 years old and physically located in Connecticut before opening an account.
Additionally, operators would have to offer voluntary self-exclusion tools that allow users to prohibit themselves from opening accounts, placing positions, or exceeding spending limits they set themselves.
In the event that an operator inadvertently allows the participation of a minor, it must immediately suspend their account, close their positions, return the funds, and deny access to the platform until that person turns 21.
Advertising restrictions: no ads targeting those under 21
The bill also contemplates significant restrictions on advertising. It would be prohibited to target advertisements to consumers under 21, including on college campuses. Likewise, promotions, images, or language that is attractive to that age group would be prohibited.
Sanctions, regulation, and mandatory study
The state Attorney General would have the power to impose civil penalties of up to $10,000 for each violation, an amount that could escalate to $50,000 if the problematic conduct continues.
The responsibility for establishing and implementing the regulations would fall to the Department of Consumer Protection, which must also conduct a study in conjunction with the Attorney General and the two federally recognized tribes in Connecticut. This study would examine youth participation, advertising practices, the impact of problem gambling, and the effects on the revenues of betting licensees. The Connecticut Lottery Corporation requested to be included as a participant in that process, citing its role as a master betting licensee and its contribution to the state’s General Fund.
If approved, HB 5038 would take effect on July 1, 2027.
Who supports HB 5038
During the public hearing held on February 18, the bill received support from various organizations. The Department of Mental Health and Addiction Services noted that prediction markets expose participants to financial losses and behavioral risks similar to those of gambling and high-risk speculative trading. The agency also indicated that some of its clients in treatment for sports betting problems simultaneously use these platforms.
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The National Alliance on Mental Illness of Connecticut expressed partial support: while clarifying that it does not support the gambling-related aspect, it recognized the logic behind regulating the sector. The alliance mentioned addiction risks for young people and concerns about brain development, and agreed with health authorities in supporting the 21-year limit and advertising restrictions.
Governor Ned Lamont’s office also supported the measure, arguing that prediction markets have blurred the lines between investing and gambling and can be harmful to those under 21.
Kalshi and state tribes oppose the bill’s progress
Not all parties shared this stance. A representative from Kalshi opposed HB 5038, arguing that prediction markets are regulated at the federal level and that no state action should be able to override that guidance.
The Mashantucket Pequot Tribal Nation and the Mohegan Tribe also showed their rejection. Both tribes argued that gambling-based prediction markets are already illegal in Connecticut, and that regulating them could create confusion and inadvertently legitimize offshore operators. They also pointed to ongoing federal litigation, including cases involving Kalshi, and warned of the risk of jurisdictional conflict.
The tribes also warned about the impact on gaming compacts between the tribes and the state, which have generated nearly $400 million in recent tax revenue and over $9 billion in total. Therefore, they urged lawmakers not to act until the courts clarify the issue of jurisdiction.
Next steps for HB 5038 in Connecticut
The February 18 public hearing was just the first step in the legislative process. HB 5038 must still go through the full legislative process before becoming law. Connecticut had shown opposition to prediction markets in the past, so this measure represents a middle-ground approach that seeks to regulate the sector rather than ban it.
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