A New Jersey regulator has ordered Kalshi and Robinhood to stop offering prediction markets based on sporting events to New Jersey locals.
Robinhood partnered with Kalshi earlier this month to launch a prediction market focused on March Madness, the NCAA basketball tournament.
In a cease-and-desist-order dated Thursday, which was viewed by Decrypt, the New Jersey Division of Gaming Enforcement alleged the trading platforms have illegally offered sports wagering services in The Garden State. The regulator called for both companies to stop allowing New Jersey residents to place bets on athletics events and void existing sports-related wagers from people living there.
Robinhood and Kalshi must comply with the order by the end of March 28 or face enforcement actions, according to the letter.
“This letter shall serve as official notice that Robinhood [and Kalshi], by facilitating and/or accepting unauthorized sports wagering from individuals within the State of New Jersey, is engaging in activity that is unlawful under not only New Jersey law, but New Jersey’s Constitution,” NJGDE Interim Director Mary Jo Flaherty said in the letter.
The state regulator added that the trading platforms’ actions violate the New Jersey Sports Wagering Act, which “only permits licensed entities to offer sports wagering to patrons located in New Jersey.”
Nearly two weeks ago, Robinhood launched its March Madness prediction markets powered by Kalshi to capitalize on traders’ growing appetites for sports betting. Legal sports wagers exceeded $140 billion in 2024, up roughly 23% from the year prior, CBS Sports reported.
However, prediction market operators such as Kalshi have encountered several regulatory obstacles as they aim to address that growing market.
Earlier this month, Kalshi received orders from regulators in Nevada to stop offering derivatives trading on professional and college athletics events in the state. And this week, Barrons reported Washington state regulators are considering issuing Kalshi a similar directive.
“Event contracts offered by Robinhood Derivatives are federally regulated by the CFTC and offered through CFTC-registered entities, assuring that retail customers can access these prediction markets in a safe and regulated manner,” Robinhood said through a spokesperson. “While we do not believe these contracts run afoul of any state laws, we are no longer allowing New Jersey residents to enter new positions for the Men’s and Women’s Basketball Tournament event contacts.”
A Kalshi spokesperson told Decrypt that the company might comment later.
Edited by James Rubin
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