Garden State regulators are taking cues from the Bay State.
The New Jersey Department of Gaming Enforcement despatched Robinhood and Kalshi a stop and desist order for the corporate’s sports activities predictions market product. The letter ordered the corporate to void all wagers already positioned by New Jersey residents.
New Jersey’s playing regulators despatched the order shortly after Massachusetts monetary regulators started investigating Robinhood.
The letter, which was first revealed by The Closing Line, alleged that the 2 firms have been “listing unauthorized sports wagers for individuals located within the State of New Jersey. This activity constitutes a violation of the New Jersey Sports Wagering Act, which only permits licensed entities to offer sports wagering to patrons located in New Jersey.”
Legal Action Threatened
Both firms got a Friday deadline to supply the NJDGE with a letter informing regulators that each firms have stopped providing sports activities prediction markets to residents of the state. The regulatory physique added that it “reserves the right to pursue any appropriate sanctions if you fail to take immediate corrective action as demanded.”
The transfer comes as Robinhood not too long ago launched sports activities prediction markets for the NCAA basketball event. The Robinhood choices are often known as “event contracts” and permit merchants to foretell particular outcomes, providing alternatives to revenue from these predictions.
Along with March Madness, the platform affords markets on leisure, politics, and the financial system. Kalshi was launched in 2021 and affords related markets. The platform affords single-game betting markets utilizing an alternate, however regulators in some states have argued that the corporate is definitely providing sports activities betting.
Companies Defend Prediction Markets
The Nevada Gaming Control Board additionally issued a cease-and-desist order towards Kalshi earlier this month. In response, the corporate denied that it has damaged any legal guidelines.
“Kalshi believes in the value of regulation, and operates under the comprehensive oversight of the Commodity Futures Trading Commission,” an organization spokesperson instructed The Closing Line. “We look forward to engaging with the state of New Jersey to resolve this matter.”
Robinhood additionally mentioned it was additionally in touch with the CFTC earlier than launching the March Madness prediction market choices and believes they’re authorized, regulated choices.
“Prediction markets have become increasingly relevant for retail and institutional investors alike, and we’re proud to be one of the first platforms to offer these products to retail customers in a safe and regulated manner,” a Robinhood spokesperson mentioned.
Sports betting has grown immensely for the reason that Supreme Court overturned the digital ban on sports activities betting exterior the state of Nevada in 2018. The buying and selling choices come at a time when the NCAA has inspired states to make faculty prop bets unlawful and a few lawmakers have moved to manage sports activities betting on the federal degree.
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