On March 27, 2025, the New Jersey Division of Gaming Enforcement (NJDGE) issued cease-and-desist letters to Kalshi and Robinhood, alleging unauthorized sports wagering activities within the state. This action raises questions about the distinction between regulated trading platforms and illegal sports betting operations.

Breaking news: New Jersey sends cease and desist letters to Kalshi, Robinhood. pic.twitter.com/beZQrRBqjH
— Dustin Gouker (@DustinGouker) March 27, 2025

Kalshi’s Business Model and Its Similarities to Betfair
Kalshi operates as a federally regulated exchange, allowing users to trade on the outcomes of various real-world events, including sports. This model bears resemblance to Betfair, a UK-based betting exchange where users bet against each other on sports events. Both platforms facilitate peer-to-peer trading, with prices reflecting the perceived likelihood of specific outcomes.
The Role of Robinhood in Expanding Event-Based Trading
Robinhood’s partnership with Kalshi aimed to broaden its event-based trading offerings, giving users access to markets that mirror sports wagering. This collaboration blurred the lines between financial trading and gambling, drawing regulatory attention.
With Robinhood’s significant user base, the introduction of event contracts on sports outcomes heightened concerns among state regulators, prompting New Jersey’s intervention.
Regulatory Challenges: Trading vs. Sports Betting
The NJDGE’s action underscores the regulatory challenges in distinguishing between financial trading and sports betting. While Kalshi is regulated by the Commodity Futures Trading Commission (CFTC), state regulators like the NJDGE assert jurisdiction over activities resembling sports wagering.
This situation mirrors Betfair’s challenges in jurisdictions where betting exchanges face stricter regulations compared to traditional sportsbooks.
Potential Redefinition of Sports Wagering Legal Frameworks
The cease-and-desist letters to Kalshi and Robinhood may prompt a reevaluation of legal frameworks governing event-based trading platforms. Regulators might seek to clarify the boundaries between permissible financial instruments and unauthorized sports betting, potentially leading to new legislation or amendments to existing laws to address emerging platforms that blur these lines.
What Lies Ahead for Robinhood and Kalshi?
New Jersey’s recent enforcement action against Kalshi highlights the evolving landscape of event-based trading and its intersection with sports betting regulations. As platforms like Kalshi continue to innovate, they may encounter increased scrutiny from state regulators aiming to maintain the integrity of their gambling markets.