At the beginning of the month, prediction market Kalshi was ordered to cease and desist in Nevada and leave the state by March 14 for allegedly providing event-based contracts that resembled sports wagers without the proper license.
Roughly two weeks later, the Nevada Gaming Control Board extended the term, enabling the New York-based company to formulate an official answer to the accusations.
Now, the regulated exchange and prediction market that allows trading on real-world events outcomes has been slapped with a similar cease and desist order from the New Jersey Division of Gaming Enforcement (NJDGE).
Robinhood, the trading platform “on a mission to democratize finance for all,” has also received the same cease and desist letter from the NJDGE after it recently partnered with Kalshi to provide sports-based prediction markets in time for March Madness.
Violating State Constitution
According to the letters first obtained by Dustin Gouker’s The Closing Line, Kalshi is accused of providing unauthorized sports betting to users in the Garden State.
The issue, apparently, stems from Kalshi’s partnership with Robinhood. According to the NJ DGE, both Kalshi and Robinhood are in violation of the state constitution, which explicitly prohibits betting on college sports events held in New Jersey or any event featuring a New Jersey-based college team, regardless of location.
The state’s strict stance on this matter has not flinched since it gave the green light to sports betting in June 2018, when it also banned wagers on in-state colleges and collegiate events hosted within its borders.
This policy is once again in focus as the Prudential Center in Newark prepares to host the NCAA Tournament’s East Regional semifinals.
The highly anticipated matchups kicked off Thursday night when No. 2 Alabama faced No. 6 BYU, followed by No. 1 Duke vs. No. 4 Arizona later in the evening.
Kalshi, to Void All Placed Bets in NJ
The NJ DGE has demanded that Kalshi provide written confirmation by 11:59 p.m. ET on Friday that it has stopped all sports wagering activities involving New Jersey residents and has voided any bets placed within the state.
Recently, regulators in Massachusetts also subpoenaed Robinhood to investigate whether offering these contracts to traders in Massachusetts was done according to current laws.
Kalshi’s NCAA Tournament prediction markets appear to have already gained a lot of traction, recording $208.2 million in contracts traded nationwide. An impressive $198 million of that total was generated in the first week alone.
Kalshi previously offered a similar market for Super Bowl LIX in February.
According to estimates from the American Gaming Association, legal bets on the men’s and women’s NCAA Tournaments would reach approximately $3.1 billion this year.
Kalshi’s reported figures account for about 6.7% of that total. Meanwhile, industry analysts at Eilers & Krejcik Gaming projected a $2.63 billion handle for college basketball’s biggest event, according to Earnings + More Substack.
In their official statements on the latest developments, the two companies expressed their desire to fully collaborate with the state to resolve the matter.
Robinhood’s representative commented that while they do not consider their contracts to “run afoul of any state laws,” they will no longer be enabling New Jersey residents to enter fresh positions for the Men’s and Women’s Basketball Tournament.
