Add another state to the bucket of cease-and-desist letters to predictive markets Kalshi and Robinhood.
First reported by Dustin Gouker's The Closing Line late Thursday afternoon, the New Jersey Department of Gaming Enforcement (NJDGE) released a cease-and-desist letter to both platforms for using "unapproved sports wagering." Both companies were issued a Friday deadline of 11:59 p.m. ET to comply.
The letters were addressed to Kalshi CEO Tarek Mansour and Robinhood CEO Vlad Tenev.
Launched in July 2021, Kalshi is a U.S.-based financial exchange offering occasion contracts and is the very first federally managed exchange for trading on real-world occasions, economics, politics, entertainment, cultures, and sporting events.
The contents
NJDGE interim director Mary Jo Flaherty sent out one-page, four-paragraph letters to each company.
In them, the department determined Kalshi "listed unauthorized sports wagers" within the state of New Jersey.
"This activity makes up a violation of the New Jersey Sports Wagering Act, which only allows licensed entities to use sports betting to patrons located in New Jersey," Flaherty composed.
"Further, Kalshi is presently providing unapproved sports wagering to New Jersey homeowners on collegiate sporting occasions occurring in New Jersey in offense of the New Jersey Constitution. That constitutional provision requireds that 'betting shall not be allowed on a college sport or athletic event that happens in New Jersey or on a sport or athletic event in which any New Jersey college team takes part no matter where the event occurs.'"
Not only does the NJDGE demand the company cease and desist from offering any kind of New Jersey sports betting, the division also insists Kalshi "void any such wagers currently placed."
Both letters were issued a couple of hours prior to the start of the NCAA men's college basketball tournament East Regional Sweet 16 matches at the Prudential Center in Newark, New Jersey.
Legally, New Jersey locals can not wager on any New Jersey college group (home or away) and can not place a bet on a college sporting event held within the state, despite the fact that New Jersey groups are not getting involved. So, for Alabama, Arizona, BYU, and Duke fans within the Garden State, they can just look for the pure satisfaction of the sport.
This month, Kalshi presented "March Madness" single game-betting markets in all 50 states, whether sports wagering is legal in that state or not for both the NCAA men's and ladies's college basketball competitions. All the markets in all the states are provided by means of an exchange, instead of "versus your home."
Just recently, both business joined forces to offer "sports event trading" on both tournaments. Kalshi escalated to prominence with last November's Presidential Election and started offering sporting event markets including the Super Bowl previously this year.
Earlier this month, Nevada became the first state to take official action versus Kalshi and its forecast market platform and the Massachusetts Secretary of State's workplace provided a subpoena to Robinhood earlier this week looking for info about its recently launched sports wagering forecast market.
Kalshi, Robinhood main declarations
Both Kalshi and Robinhood provided official declarations on the matter.
"Kalshi thinks in the value of policy and operates under the extensive oversight of the Commodity Futures Trading Commission. We eagerly anticipate engaging with the state of New Jersey to solve this matter," said a Kalshi representative in an email to Covers Thursday evening.
"Event contracts provided by Robinhood Derivatives are federally regulated by the CFTC and used through CFTC-registered entities, assuring that retail customers can access these prediction markets in a safe and regulated way," said a Robinhood representative in an email to Covers. "While we do not think these agreements run afoul of any state laws, we are no longer allowing New Jersey citizens to get in brand-new positions for the Men's and Women's Basketball Tournament event contracts."
Robinhood did include that this action only impacts agreements connected to the men's and women's college basketball competitions. New Jersey homeowners will still have the ability to access their forecast markets hub and contracts on other categories.
