New Jersey Issues Cease-and-Desist to Kalshi and Robinhood

By Matt Speakman,
Betting Expert at online-gambling.com

Matt Speakman Betting Expert at online-gambling.com

A die-hard fan of the Patriots, Matt Speakman is an expert on everything related to sports betting and DFS sites. Over the years, he has proven a valuable asset for our team at online-gambling.com. You can find Speakman's professional tips and tricks in any of his many articles on the website.

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Last updated: March 31, 2025

The New Jersey Division of Gaming Enforcement (NJDGE) has sent cease-and-desist letters to the prediction market platform Kalshi and financial trading company Robinhood. The letter demanded they immediately stop sports wagering services and void any such wagers already placed in the state.

The Start of Sports Event Trading

Founded in 2021 as a federally regulated financial exchange, Kalshi enables users to trade event contracts on various real-world events. In collaboration with Robinhood, Kalshi introduced “sports event trading” for the NCAA men’s and women’s basketball tournaments. Unlike traditional wagers, these markets are presented as event contracts, allowing users to buy and sell positions on game outcomes through an exchange model rather than betting against a bookmaker.

The Allegations Against Kalshi and Robinhood

The NJDGE asserts that Kalshi and Robinhood are violating the Sports Wagering Act and are operating without the necessary state-level authorization. They were instructed to comply or face possible legal consequences.

In the letter addressed to Kalshi CEO Tarek Mansour, NJDGE Interim Director Mary Jo Flaherty stated that Kalshi had been found to list unauthorized sports wagers accessible to individuals in New Jersey. The letter pointed out that Kalshi offered prediction markets on collegiate sporting events, including matchups in the state, which directly contravenes the New Jersey Constitution.

Robinhood CEO Vlad Tenev received a similar letter accusing the company of enabling sports event trading through its platform in collaboration with Kalshi. Each letter requested that both platforms provide written confirmation that they had ceased all sports wagering operations targeting New Jersey residents.

Response from Kalshi and Robinhood

In response to the letter, Kelshi reaffirmed its commitment to regulatory compliance and signaled a willingness to engage with state officials to resolve the matter. “Kalshi believes in the value of regulation and operates under the comprehensive oversight of the Commodity Futures Trading Commission. We look forward to engaging with the state of New Jersey to resolve this matter,” a Kalshi spokesperson stated.

Robinhood also defended its position and argued that its events contracts comply with federal regulations. However, it did admit that it had halted new positions for the NCAA basketball tournament contracts in New Jersey to comply with the order.

Legality of Prediction Markets in Focus Again

New Jersey isn’t the first state to act against Kalshi’s sports trading markets. Nevada has also ordered a cease-and-desist against Kalshi, although enforcement measures have not yet been implemented.

Robinhood is also under scrutiny by the Massachusetts Securities Division concerning potential violations of state security laws related to its involvement in sports prediction markets.

The emergence of sports event contracts highlights the increasing overlap of financial trading and traditional sports betting, drawing regulatory attention across many states. Although Kalshi and Robinhood argue that their offerings differ from standard sports gambling, regulators remain skeptical.