The New Jersey Division of Gaming Enforcement has issued a cease-and-desist order to trading platforms Robinhood and Kalshi, preventing them from offering prediction markets based on sporting events to New Jersey residents. The regulator alleged that these platforms were engaging in illegal sports wagering activities in the state, violating New Jersey law and the state’s constitution. The order requires Robinhood and Kalshi to stop allowing New Jersey residents to place bets on athletic events and void any existing sports-related wagers made by those individuals. Failure to comply could result in enforcement actions. This comes after Robinhood partnered with Kalshi to launch a prediction market focused on March Madness, aiming to capitalize on the growing interest in sports betting. Regulatory obstacles have been a challenge for prediction market operators like Kalshi, as they navigate the legal landscape to address the expanding market. Robinhood defended their event contracts as federally regulated by the CFTC, ensuring safe access for retail customers. Despite their belief that the contracts do not violate state laws, they have halted new positions for the Men’s and Women’s Basketball Tournament event contracts in New Jersey. Kalshi has not yet issued a comment on the matter. This development highlights the regulatory complexities surrounding prediction markets and sports wagering in the rapidly evolving landscape of financial and betting technologies.
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