Lawmakers propose stricter controls under HB 5038

Connecticut legislators are weighing a bill that would impose a 21+ age requirement and advertising restrictions on prediction market platforms operating in the state.

House Bill 5038 (HB 5038) would formally define a prediction market platform as any service that allows consumers to take speculative positions on future events using a bid-ask format.

If adopted, the measure would take effect on 1 July 2027.

Core requirements under the bill

Under HB 5038, operators would be required to introduce robust compliance systems, including:

  • Age verification confirming users are at least 21
  • Geolocation checks ensuring users are physically in Connecticut
  • Voluntary self-exclusion tools
  • Spending limit controls

If an underage user slips through the system, operators must:

  • Immediately suspend the account
  • Close all open positions
  • Refund remaining funds
  • Deny access until the individual turns 21

Advertising and enforcement

The proposal also seeks to curb marketing practices. Platforms would be barred from:

  • Advertising to individuals under 21
  • Promoting services on college campuses
  • Using imagery, endorsements or language appealing to younger audiences

Violations could trigger civil penalties of up to $10,000 per breach. Continued misconduct may raise that figure to $50,000, enforceable by the Connecticut Attorney General.

The Connecticut Department of Consumer Protection would oversee rulemaking and enforcement. The agency must also conduct a comprehensive study in consultation with the Attorney General and the state’s two federally recognised tribes.

That study would examine:

  • Youth participation rates
  • Advertising practices
  • Links to problem gambling
  • Revenue implications for master wagering licensees

Public health groups back the move

During a public hearing on 18 February, several organisations voiced support.

The Connecticut Department of Mental Health and Addiction Services argued that prediction markets carry behavioural and financial risks similar to gambling and high-risk trading. Officials noted that some sports betting treatment clients are also active on prediction platforms.

The National Alliance on Mental Illness Connecticut endorsed the 21+ threshold and advertising limits, citing addiction risks and neurological development concerns among young adults.

Governor Ned Lamont also signalled support, stating that prediction markets blur the line between investing and gambling, particularly for younger users.

The Connecticut Lottery Corporation backed a regulated framework and requested participation in the mandated study, noting its role as a master wagering licensee contributing to the General Fund.

Industry and tribal opposition emerges

Not all stakeholders are convinced.

A representative for Kalshi opposed the bill, arguing that prediction markets fall under federal oversight and that state-level intervention could conflict with federal guidance.

The Mashantucket Pequot Tribal Nation and the Mohegan Tribe also pushed back. They contend that gaming-based prediction markets are already illegal in Connecticut and that regulating them risks legitimising offshore operators.

The tribes further warned of potential clashes with ongoing federal litigation and expressed concern that the bill could undermine tribal-state gaming compacts, which have generated billions in revenue over the years.

University flags integrity concerns

The University of Connecticut submitted testimony partly opposing the measure.

While supporting age and advertising restrictions, the university urged lawmakers to go further by banning contracts tied to collegiate and amateur sports. It cited integrity risks to student-athletes, including harassment and recent federal cases involving alleged point-shaving schemes.

Legislative path still uncertain

HB 5038 has only cleared its first procedural step and must navigate committee scrutiny and floor votes before reaching the governor’s desk.

The bill appears to represent a middle ground in a state that has previously shown scepticism toward prediction markets. Whether it becomes law may depend on how lawmakers reconcile federal jurisdiction questions with mounting public health concerns.

Summary

Connecticut’s HB 5038 proposes a 21+ age requirement, advertising restrictions and strict compliance obligations for prediction market platforms. Public health groups, the governor’s office and the state lottery support the measure, while Kalshi and tribal nations argue it conflicts with federal authority and existing gaming compacts. The bill now advances through the legislative process with implementation slated for mid-2027 if approved.