Report: NJ DGE Sends Kalshi And Robinhood Cease-And-Desists For ‘Unauthorized Sports Wagers’
Agency claims platforms are violating state constitution with prediction market offerings
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The growing conflict between states with regulated sports betting and the trading platforms offering prediction markets on sporting events to customers in those states erupted on a large scale Thursday with the report that the New Jersey Division of Gaming Enforcement sent cease-and-desist letters to both Kalshi and Robinhood.
Dustin Gouker’s The Closing Line was the first to obtain copies of the letters in which the state agency alleges that Kalshi “is listing unauthorized sports wagers for individuals located within the state of New Jersey.” Robinhood has partnered with Kalshi to offer certain sports-based prediction markets on its own trading platform.
The NJ DGE further stated Kalshi and Robinhood are in violation of the state constitution that mandates “wagering shall not be permitted on a college sport or athletic event that takes place in New Jersey or sport or athletic event in which any New Jersey college team participates regardless of where the event takes place.”
The Garden State has had an expanded carveout that bans betting on in-state colleges and universities and collegiate sporting events that take place in the state since the first bets were accepted back in June 2018.
The Prudential Center in Newark is hosting the East Regional semifinals of the NCAA Tournament, with tip-off between No. 2 seed Alabama and No. 6 seed BYU scheduled for 7:09 p.m. local time Thursday night. That game will be followed by top-seeded Duke vs. No. 4 seed Arizona, tentatively scheduled for a 9:39 p.m. ET tip-off.
New Jersey the latest to send Kalshi a C&D letter
New Jersey joins Nevada in sending Kalshi a cease-and-desist letter, though the NJ DGE set an immediate deadline for Kalshi to respond. The state agency has asked for written confirmation by 11:59 p.m. ET on Friday that Kalshi “have ceased all sports wagering activities targeting New Jersey residents and voided all such wagers placed in New Jersey.”
Kalshi requested and received on May 14 an extension to respond to the Nevada Gaming Control Board’s cease-and-desist letter dated March 4 in which it had 10 days to reply.
Massachusetts regulators sent a subpoena to Robinhood last week questioning the legality of offering such contracts to traders in the Bay State.
Kalshi’s prediction markets for the NCAA Tournament could be labeled an early success as it currently lists $208.2 million worth of contracts traded nationwide. Roughly $198 million came in the first seven days after Kalshi announced it would be making markets available similar to those it had for Super Bowl LIX in February.
The $208.2 million figure is roughly 6.7% of the $3.1 billion the American Gaming Association estimated in legal wagering for the men’s and women’s NCAA Tournaments this year, an estimate that did not appear to contemplate the action that Kalshi customers across all 50 states might contribute. Eilers & Krejcik Gaming estimated a $2.63 billion handle for college basketball’s signature event according to the Earnings + More Substack.
