Add another state to the bucket of cease-and-desist letters to predictive markets Kalshi and Robinhood.

First reported by Dustin Gouker's The Closing Line late Thursday afternoon, the New Jersey Department of Gaming Enforcement (NJDGE) released a cease-and-desist letter to both platforms for offering "unauthorized sports wagering." Both business were released a Friday due date of 11:59 p.m. ET to comply.

The letters were dealt with to Kalshi CEO Tarek Mansour and Robinhood CEO Vlad Tenev.

Launched in July 2021, Kalshi is a U.S.-based financial exchange offering occasion contracts and is the very first federally controlled exchange for trading on real-world events, economics, politics, home entertainment, cultures, and sporting events.

The contents

NJDGE interim director Mary Jo Flaherty sent one-page, four-paragraph letters to each company.

In them, the department identified Kalshi "noted unauthorized sports wagers" within the state of New Jersey.

"This activity constitutes an infraction of the New Jersey Sports Wagering Act, which only permits certified entities to use sports betting to clients found in New Jersey," Flaherty wrote.

"Further, Kalshi is currently providing unauthorized sports wagering to New Jersey homeowners on college sporting events happening in New Jersey in offense of the New Jersey Constitution. That constitutional arrangement requireds that 'wagering shall not be allowed on a college sport or athletic event that takes location in New Jersey or on a sport or athletic event in which any New Jersey college group participates despite where the occasion takes place.'"

Not only does the NJDGE need the company stop and desist from using any type of New Jersey sports wagering, the likewise insists Kalshi "void any such wagers already put."

Both letters were issued a number of hours prior to the start of the NCAA guys's college basketball tournament East Regional Sweet 16 matchups at the Prudential Center in Newark, New Jersey.

Legally, New Jersey locals can not wager on any New Jersey collegiate group (home or away) and can not place a bet on a college sporting occasion held within the state, despite the fact that New Jersey teams are not taking part. So, for Alabama, Arizona, BYU, and Duke fans within the Garden State, they can only view for the pure enjoyment of the sport.

This month, Kalshi presented "March Madness" single game-betting markets in all 50 states, whether sports betting is legal in that state or not for both the NCAA males's and ladies's college basketball tournaments. All the marketplaces in all the states are used by means of an exchange, instead of "against your home."

Just recently, both companies joined forces to use "sports occasion trading" on both tournaments. Kalshi increased to prominence with last November's Presidential Election and began offering sporting event markets including the Super Bowl earlier this year.

Earlier this month, Nevada became the very first state to take main action versus Kalshi and its forecast market platform and the Massachusetts Secretary of State's workplace released a subpoena to Robinhood earlier this week seeking info about its just recently introduced sports wagering forecast market.

Kalshi, Robinhood main declarations

Both Kalshi and Robinhood offered official declarations on the matter.

"Kalshi believes in the value of guideline and operates under the detailed oversight of the Commodity Futures Trading Commission. We anticipate engaging with the state of New Jersey to fix this matter," said a Kalshi spokesperson in an email to Covers Thursday night.

"Event agreements offered by Robinhood Derivatives are federally controlled by the CFTC and offered through CFTC-registered entities, guaranteeing that retail customers can access these prediction markets in a safe and regulated manner," stated a Robinhood representative in an email to Covers. "While we do not believe these agreements run afoul of any state laws, we are no longer permitting New Jersey homeowners to enter brand-new positions for the Men's and Women's Basketball Tournament event contracts."

Robinhood did include that this action just impacts contracts related to the guys's and females's college basketball competitions. New Jersey residents will still be able to access their prediction markets hub and contracts on other categories.