Forecasting market The New Jersey Division of Gaming Enforcement has sent cease and desist letters to Kalshi and Robinhood, their new partner.
For allegedly offering event-based contracts that looked like sports wagers without the required license, prediction market Kalshi was ordered to cease and desist operations in Nevada at the beginning of the month and to vacate the state by March 14.
The Nevada Gaming Control Board extended the term about two weeks later, giving the New York-based business time to prepare a formal response to the charges.
The New Jersey Division of Gaming Enforcement (NJDGE) has now issued a similar cease and desist order to the licensed exchange and prediction market that permits trading on the results of actual events.
Following its recent partnership with Kalshi to offer sports-based prediction markets in time for March Madness, Robinhood, the trading platform that is “on a mission to democratize finance for all,” has also received the identical cease and desist notice from the NJDGE.
Breaking the State Constitution
Dustin Gouker’s The Closing Line first obtained the letters, which accuse Kalshi of offering customers in the Garden State illegal sports betting.
It seems that Kalshi’s collaboration with Robinhood is the root of the problem. The NJ DGE claims that both Kalshi and Robinhood are breaking the state constitution, which expressly forbids wagering on college athletic events that take place in New Jersey or on any event that features a college team from New Jersey, no matter where the event takes place.
Since approving sports betting in June 2018 and outlawing bets on in-state universities and collegiate events held within its boundaries, the state has been steadfast in its stance on this issue.
As the Prudential Center in Newark gets ready to host the NCAA Tournament’s East Regional quarterfinals, attention is once again focused on this policy.
Thursday night’s highly anticipated games began with No. 2 Alabama taking on No. 6 BYU, and later in the evening, No. 1 Duke took on No. 4 Arizona.
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To void all bets placed in New Jersey, Kalshi
The NJ DGE has requested that Kalshi give written certification by Friday at 11:59 p.m. ET that it has canceled any bets placed within the state and halted all sports wagering activity involving New Jersey residents.
Robinhood was recently subpoenaed by Massachusetts officials to look into whether it was compliant with the law when it offered these contracts to traders in the state.
With $208.2 million in contracts exchanged worldwide, Kalshi’s NCAA Tournament prediction markets seem to have already garnered a lot of popularity. Of that sum, an astounding $198 million was made in the first week alone.
In February, Kalshi provided a comparable market for Super Bowl LIX.
The American Gaming Association believes that this year’s legal wagers on the NCAA Tournaments for men and women will total about $3.1 billion.
Kalshi’s stated numbers make up roughly 6.7% of the sum. According to Earnings + More Substack, industry experts at Eilers & Krejcik Gaming estimated that the largest event in college basketball would bring in $2.63 billion.
The two businesses stated in their formal remarks on the most recent events that they wanted to work closely with the government to find a solution.
Although they do not believe their contracts “run afoul of any state laws,” Robinhood’s spokesperson stated that they will no longer be allowing New Jersey residents to apply for new spots in the Men’s and Women’s Basketball Tournament.
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