New Jersey Cracks Down on Kalshi’s March Madness Wagers

Yesterday, prediction market platform Kalshi and brokerage firm Robinhood received more bad news. The New Jersey Division of Gaming Enforcement (NJDGE) sent cease-and-desist letters accusing the pair of offering “unauthorized sports wagering” in violation of state law.

Kalshi’s latest legal compliance issue comes after the Nevada Gaming Control Board (NGCB) also served a cease-and-desist letter on the organization last month.

That being said, there is a slight difference between the two; the NJDGE called out Kalshi for offering markets on college sports betting — a practice that is banned under New Jersey’s state constitution. In Nevada, Kalshi has been reprimanded for violating the state’s rules against election betting.

The latest infringement demonstrates the legal repercussions the firms face. Earlier this month, Kalshi marketed March Madness betting markets across all 50 states. Now, New Jersey lawmakers are demanding that both platforms not only halt all sports wagering activities but also instruct them to void any wagers placed by New Jersey residents with immediate effect.

Kalshi’s Woes Are Multiplying

The news of the prohibition letters from the NJDGE and NGCB comes in spite of Kalshi’s recent high-profile legal victories — which include a major ruling against the Commodity Futures Trading Commission (CFTC) — but it still illustrates the hurdles the prediction market firm faces in establishing the rules of engagement.

While Kalshi is not alone in facing these operational headwinds, as it expands into sports and beyond it is increasingly causing friction with state legislators. Many of them believe the unique wagering format violates their state’s taxation laws — particularly in relation to sports betting legislation.

Undoubtedly, Kalshi is at the forefront of attempting to carve out a niche in regulated prediction markets. Nevertheless, it appears to be thwarted by the patchwork makeup of individual state laws, which will inevitably soon see it receive further legal notices from other states.

That being said, as lawmakers and regulators continue to grapple with how to govern this adaptive form of betting, Kalshi will hope the gray areas become clearer in their bid to help pioneer the future of US prediction markets.