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) provided a cease-and-desist letter to both platforms for offering "unauthorized sports wagering." Both companies were issued a Friday due date of 11:59 p.m. ET to comply.

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

Launched in July 2021, Kalshi is a U.S.-based monetary exchange offering occasion agreements and is the first federally controlled 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 identified Kalshi "noted unapproved sports wagers" within the state of New Jersey.

"This activity makes up a violation of the New Jersey Sports Wagering Act, which only allows licensed entities to use sports betting to customers found in New Jersey," Flaherty wrote.

"Further, Kalshi is presently providing unauthorized sports wagering to New Jersey citizens on college sporting occasions occurring in New Jersey in violation of the New Jersey Constitution. That constitutional arrangement requireds that 'wagering will not be permitted on a college sport or athletic event that occurs in New Jersey or on a sport or athletic occasion in which any New Jersey college team gets involved despite where the occasion occurs.'"

Not only does the NJDGE demand the company stop and desist from providing any form of New Jersey sports betting, the department likewise firmly insists Kalshi "void any such wagers currently put."

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

Legally, New Jersey residents can not bet on any New Jersey college team (home or away) and can not place a bet on a collegiate sporting occasion held within the state, although New Jersey teams are not getting involved. So, for Alabama, Arizona, BYU, and Duke fans within the Garden State, they can just expect the pure satisfaction of the sport.

This month, Kalshi presented "March Madness" single game-betting markets in all 50 states, whether sports wagering is legal in that state or not for both the NCAA guys's and women's college basketball competitions. All the markets in all the states are offered via an exchange, instead of "against your 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 providing sporting occasion markets consisting of the Super Bowl previously this year.

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

Kalshi, Robinhood official statements

Both Kalshi and Robinhood offered official statements on the matter.

"Kalshi thinks in the value of policy and runs under the comprehensive oversight of the Commodity Futures Trading Commission. We look forward to engaging with the state of New Jersey to fix this matter," said a Kalshi spokesperson in an email to Covers Thursday evening.

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

Robinhood did add that this action only affects contracts associated with the men's and women's college basketball competitions. New Jersey residents will still be able to access their prediction markets center and agreements on other classifications.