New Jersey Orders Kalshi And Robinhood To Halt Sports Prediction MarketsGarden State Regulators Believe The Sports Prediction Markets Are Considered Illegal Gambling |
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Garden State regulators are taking cues from the Bay State.
The New Jersey Department of Gaming Enforcement sent Robinhood and Kalshi a cease and desist order for the company’s sports predictions market product. The letter ordered the company to void all wagers already placed by New Jersey residents.
New Jersey’s gambling regulators sent the order shortly after Massachusetts financial regulators began investigating Robinhood.
The letter, which was first revealed by The Closing Line, alleged that the two companies were “listing unauthorized sports wagers for individuals located within the State of New Jersey. This activity constitutes a violation of the New Jersey Sports Wagering Act, which only permits licensed entities to offer sports wagering to patrons located in New Jersey.”
Legal Action Threatened
Both companies were given a Friday deadline to provide the NJDGE with a letter informing regulators that both companies have stopped offering sports prediction markets to residents of the state. The regulatory body added that it “reserves the right to pursue any appropriate sanctions if you fail to take immediate corrective action as demanded.”
The move comes as Robinhood recently launched sports prediction markets for the NCAA basketball tournament. The Robinhood options are known as “event contracts” and allow traders to predict specific outcomes, offering opportunities to profit from those predictions.
Along with March Madness, the platform offers markets on entertainment, politics, and the economy. Kalshi was launched in 2021 and offers similar markets. The platform offers single-game betting markets using an exchange, but regulators in some states have argued that the company is actually offering sports betting.
Companies Defend Prediction Markets
The Nevada Gaming Control Board also issued a cease-and-desist order against Kalshi earlier this month. In response, the company denied that it has broken any laws.
“Kalshi believes in the value of regulation, and operates under the comprehensive oversight of the Commodity Futures Trading Commission,” a company spokesperson told The Closing Line. “We look forward to engaging with the state of New Jersey to resolve this matter.”
Robinhood also said it was also in contact with the CFTC before launching the March Madness prediction market offerings and believes they are legal, regulated offerings.
“Prediction markets have become increasingly relevant for retail and institutional investors alike, and we’re proud to be one of the first platforms to offer these products to retail customers in a safe and regulated manner,” a Robinhood spokesperson said.
Sports betting has grown immensely since the Supreme Court overturned the virtual ban on sports betting outside the state of Nevada in 2018. The trading options come at a time when the NCAA has encouraged states to make college prop bets illegal and some lawmakers have moved to regulate sports betting on the federal level.
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