Kalshi, Robinhood Told To Cease And Desist In New Jersey

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Add another state to the container 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) provided a cease-and-desist letter to both platforms for offering "unauthorized sports betting." Both business were issued a Friday due date 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 monetary exchange offering occasion agreements and is the very first federally controlled exchange for trading on real-world events, economics, politics, home entertainment, cultures, and sporting occasions.


The contents


NJDGE interim director Mary Jo Flaherty sent one-page, four-paragraph letters to each company.


In them, the department identified Kalshi "noted unauthorized sports wagers" within the state of New Jersey.


"This activity constitutes a violation of the New Jersey Sports Wagering Act, which only permits certified entities to provide sports betting to patrons located in New Jersey," Flaherty composed.


"Further, Kalshi is currently providing unauthorized sports wagering to New Jersey homeowners on collegiate sporting occasions happening in New Jersey in offense of the New Jersey Constitution. That constitutional arrangement requireds that 'betting will not be allowed on a college sport or athletic occasion that occurs in New Jersey or on a sport or athletic occasion in which any New Jersey college team takes part despite where the event takes place.'"


Not only does the NJDGE need the business cease and desist from providing any type of New Jersey sports betting, the department likewise insists Kalshi "void any such wagers currently put."


Both letters were issued a couple of hours prior to the start of the NCAA men's college basketball competition East Regional Sweet 16 at the Prudential Center in Newark, New Jersey.


Legally, New Jersey locals can not wager on any New Jersey collegiate team (home or away) and can not put a bet on a collegiate sporting event held within the state, even though New Jersey groups are not participating. So, for Alabama, Arizona, BYU, and Duke fans within the Garden State, they can only expect the pure pleasure of the sport.


This month, Kalshi introduced "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 females's college basketball competitions. All the marketplaces in all the states are used by means of an exchange, rather than "against your home."


Just last week, both business signed up with forces to provide "sports occasion trading" on both tournaments. Kalshi increased to prominence with last November's Presidential Election and started providing sporting occasion markets consisting of the Super Bowl earlier this year.


Earlier this month, Nevada became the very first state to take official action against Kalshi and its prediction market platform and the Massachusetts Secretary of State's office provided a subpoena to Robinhood earlier this week seeking info about its recently launched sports wagering prediction market.


Kalshi, Robinhood main declarations


Both Kalshi and Robinhood offered official statements on the matter.


"Kalshi thinks in the worth of regulation and runs under the extensive oversight of the Commodity Futures Trading Commission. We anticipate engaging with the state of New Jersey to resolve this matter," stated a Kalshi representative in an email to Covers Thursday evening.


"Event agreements provided by Robinhood Derivatives are federally regulated by the CFTC and used through CFTC-registered entities, ensuring that retail consumers can access these forecast markets in a safe and regulated way," stated a Robinhood representative in an e-mail to Covers. "While we do not believe these contracts run afoul of any state laws, we are no longer permitting New Jersey homeowners to get in new positions for the Men's and Women's Basketball Tournament event agreements."


Robinhood did include that this action just impacts contracts associated with the guys's and women's college basketball competitions. New Jersey locals will still have the ability to access their forecast markets hub and contracts on other classifications.

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