Add another state to the pail 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) issued a cease-and-desist letter to both platforms for providing "unapproved sports wagering." Both companies were released a Friday deadline 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 agreements and is the very first federally regulated exchange for trading on real-world events, economics, politics, entertainment, cultures, and sporting events.

The contents

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

In them, the department determined Kalshi "listed unapproved sports wagers" within the state of New Jersey.

"This activity constitutes a violation of the New Jersey Sports Wagering Act, which only allows licensed entities to use sports wagering to customers found in New Jersey," Flaherty composed.

"Further, Kalshi is currently offering unauthorized sports wagering to New Jersey residents on college sporting events taking place in New Jersey in offense of the New Jersey Constitution. That constitutional arrangement requireds that 'betting shall not be allowed on a college sport or athletic event that happens in New Jersey or on a sport or athletic event in which any New Jersey college team takes part despite where the event takes location.'"

Not only does the NJDGE demand the company cease and desist from using any form of New Jersey sports wagering, the division also firmly insists Kalshi "void any such wagers already positioned."

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

Legally, New Jersey homeowners can not bet on any New Jersey college group (home or away) and can not position a bet on a college sporting occasion held within the state, even though New Jersey teams are not participating. So, for Alabama, Arizona, BYU, and Duke fans within the Garden State, they can just look for the pure enjoyment of the sport.

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

Just recently, both companies signed up with forces to provide "sports occasion trading" on both competitions. Kalshi skyrocketed to prominence with last November's Presidential Election and started using sporting occasion markets consisting of the Super Bowl earlier this year.

Earlier this month, Nevada ended up being the first state to take official action versus Kalshi and its prediction market platform and the Massachusetts Secretary of State's office provided a subpoena to Robinhood earlier today inquiring about its just recently released sports wagering forecast market.

Kalshi, Robinhood official declarations

Both Kalshi and Robinhood offered official statements on the matter.

"Kalshi thinks in the value of regulation 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 representative in an email to Covers Thursday night.

"Event contracts offered by Robinhood Derivatives are federally regulated by the CFTC and provided through CFTC-registered entities, ensuring that retail customers can access these forecast markets in a safe and regulated way," stated a Robinhood spokesperson in an email to Covers. "While we do not think these agreements run afoul of any state laws, we are no longer enabling New Jersey citizens to enter brand-new positions for the Men's and Women's Basketball Tournament occasion contracts."

Robinhood did add that this action only impacts agreements related to the men's and ladies's college basketball competitions. New Jersey homeowners will still have the ability to access their forecast markets center and agreements on other classifications.