Cease and Desist Orders Sent to Robinhood and Kalshi by NJ Regulators
The NJDGE has issued cease-and-desist orders to Kalshi, a prediction market platform, and Robinhood, a financial trading firm.
New Jersey Division of Gaming Enforcement regulatory action
Key Facts:
- Both Kalshi and Robinhood are alleged to be offering illegal sports betting markets through prediction services.
- Cease and desist letters threaten legal action against the two companies
- Robinhood and Kalshi both defend their products as lawful under New Jersey gaming regulations
This action by the NJDGE necessitates an immediate cessation of sports betting services within the state from Kalshi and Robinhood. The regulatory action was made public on Thursday, March 7.
It’s predicated on alleged violations of New Jersey’s stringent sports betting legislation, demanding the nullification of all wagers placed by New Jersey residents.
The NJDGE contends that Kalshi and Robinhood are operating without the requisite state authorization, breaching the New Jersey Sports Wagering Act. Both entities must comply by 11:59 PM on Friday, April 4, or face potential legal repercussions.
In response to the NJDGE’s directive, Kalshi reaffirmed its commitment to regulatory compliance and expressed a willingness to engage with state officials to resolve the issue.
“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.
The NJDGE’s cease-and-desist letter, delivered to Kalshi CEO Tarek Mansour, details the accusations. Interim Director Mary Jo Flaherty of the NJDGE asserted that Kalshi was providing unauthorized sports wagers to New Jersey residents.
Specifically, the letter highlighted Kalshi’s involvement in offering prediction markets on collegiate sporting events, including those within New Jersey, a direct contradiction of the New Jersey Constitution.
“Furthermore, Kalshi is actively providing unauthorized sports wagering to New Jersey residents on collegiate sporting events occurring in New Jersey, thus violating the New Jersey Constitution,” the letter from state regulators says. The constitutional provision in question explicitly prohibits “wagering on a college sport or athletic event that takes place in New Jersey or on a sport or athletic event in which any New Jersey college team participates regardless of where the event takes place.”
Vlad Tenev, Chief Executive Officer of Robinhood, received communication from regulators alleging that his company facilitated sports event trading on its platform in conjunction with Kalshi.
NJDGE is directing Kalshi and Robinhood to provide written confirmation of their compliance by the designated deadline, confirming the cessation of all sports wagering operations in New Jersey. Fines and further legal action could be pursued otherwise.
Kalshi Joining Forces with Robinhood
Launched in 2021, Kalshi operates as a federally regulated financial exchange, allowing users to trade event contracts tied to real-world occurrences. Recently, the platform broadened its scope to include sports-related markets, initially offering futures trading on major events such as the Super Bowl.
Shortly after, March Madness matchups were added to the mix. Just last week, Kalshi joined forces with Robinhood to introduce “sports event trading,” specifically for the NCAA men’s and women’s basketball tournaments.
Unlike traditional sports betting, these event contracts function within an exchange model, enabling users to buy and sell positions based on game results rather than placing bets against a bookmaker.
Although Kalshi operates under the jurisdiction of the Commodity Futures Trading Commission (CFTC), regulators in New Jersey contend that its offerings constitute unauthorized sports betting under state law.
The New Jersey Division of Gaming Enforcement (NJDGE) has taken a position similar to other regulatory bodies scrutinizing Kalshi and Robinhood’s activities. New Jersey is not alone in challenging Kalshi’s sports-related markets.Nevada regulators issued a cease-and-desist order against the platform earlier in March 2025, though enforcement remains unresolved.
More Headaches for Robinhood
Robinhood faces other challenges. The company is currently under investigation by the Massachusetts Securities Division, which is evaluating whether the company has violated state securities laws through its participation in sports prediction markets.
The rise of sports event contracts highlights the increasing overlap between financial trading and sports betting, a development that has drawn significant regulatory attention.
Kalshi and Robinhood insist their products are distinct from conventional gambling, but that hasn’t halted state regulators from pursuing action against them both.
In response to the scrutiny, Robinhood defended its practices, emphasizing compliance with federal regulations.
A company spokesperson stated, “Event contracts offered by Robinhood Derivatives are federally regulated by the CFTC and provided through CFTC-registered entities, ensuring that retail customers have access to these prediction markets within a secure and regulated framework.”
However, despite this stance, Robinhood confirmed that it had suspended new positions for NCAA basketball tournament contracts in New Jersey to comply with the state’s directive.
