Kalshi Files Lawsuits Against Nevada And New Jersey Over March Madness Prediction Markets

Kalshi is striking back against New Jersey and Nevada.

After recently being ordered to stop offering sports prediction markets in New Jersey and Nevada, financial exchange platform Kalshi announced lawsuits against the two states on Monday.

Financial regulators in both states ordered the company to cease offering prediction markets on the NCAA basketball tournament. Robinhood, which had contracted with Kalshi to provide a similar service, was also ordered to stop offering the service in each state.

Prediction markets allow users to buy shares based on how likely or unlikely specific outcomes are, and the March Madness selections were initially available in all 50 states. Also known as “event contracts,” the markets allow traders to profit from predictions on entertainment, politics, economics and other industries.

The New Jersey Department of Gaming Enforcement and the Nevada Gaming Commission view the March Madness markets as unlicensed sports betting.

Kalshi CEO Tarek Mansour disagrees with that assessment.

“Both states have issued cease and desist orders that fundamentally misunderstand prediction markets and undermine the foundation of U.S. financial markets, which are regulated by the federal government,” he noted Sunday on X/Twitter. “We have made every effort to engage proactively with both Nevada and New Jersey and try to educate them about prediction markets, how they are regulated, and how critical they are … but our words fell on deaf ears.

“I can’t speak to why they are taking this action, but prediction markets have proven their use, so it is a shame that these authorities are still trying to censor them.”

The lawsuit comes as the March Madness men’s Final Four tips off on Saturday, with the championship set for Monday. Kalshi says the services are legal and fully regulated by the Commodity Futures Trading Commission.

Critics argue that Kalshi is skirting gaming law and, in essence, offering unregulated online sports betting.

New Jersey regulators 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.”

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