Robinhood and Kalshi Ordered to Cease Operations in New Jersey

Robinhood and Kalshi have been issued cease-and-desist letters by the New Jersey Department of Gaming Enforcement (NJDGE) for their sports events contracts in the state. They have until 11:59 p.m. ET Friday to comply.

In letters addressed to Kalshi CEO Tarek Mansour and Robinhood CEO Vlad Tenev, the NJDGE accused the platforms of “offering unauthorized sports wagering” in the state.

“This activity constitutes a violation of the New Jersey Sports Wagering Act, which only permits licensed entities to offer sports wagering to New Jersey residents on collegiate sports events occurring in New Jersey in violation of the New Jersey Constitution,” the letter said.

If the companies do not comply with orders to leave, the NJDGE said it will take further action, which may include any measures available under state law.

Legally, New Jersey residents are prohibited from betting on any in-state school and cannot wager on a collegiate sporting event held within the state. Notably, these letters were sent hours before the NCAA men’s basketball East Regional tipped off at the Prudential Center in Newark, N.J. on Thursday.

Kalshi recently introduced single-game betting markets for March Madness in all 50 states. The markets are offered via an exchange as opposed to “against the house.”

Kalshi also announced a partnership with Robinhood to offer “sports event trading” on both the men’s and women’s tournaments. Kalshi’s first foray into sports came earlier this year with the Super Bowl.

The NJDGE asked that both markets void any wagers that have already been placed.

Kalshi already faces cease-and-desist orders in Nevada, the first legal action taken against the market at the state level. The Nevada Gaming Control Board said Kalshi has violated several state laws by offering sports and election odds.

“Every sports pool in Nevada must undergo an extensive investigation prior to licensing, must adhere to strict regulation once licensed, and must pay all applicable taxes and fees,” Kirk D. Hendrick, chairman of the Nevada Gaming Control Board, said in a letter to Kalshi.

“Any unlawful attempts to circumvent Nevada’s right to regulate gaming activity within its borders will be met with the full force of criminal and civil penalties.”

Kalshi originally had until March 14 to comply before the deadline was extended.  

Robinhood is also the focus of an investigation in Massachusetts for allowing users to bet on the outcome of various events, including March Madness.