New Jersey District Court grants Kalshi restraining order against NJDGE
Kalshi will be able to continue operating in New Jersey until further notice.
Key Points
- A temporary restraining order and preliminary injunction has been granted to Kalshi against the New Jersey Division of Gaming Enforcement
- Judge Kiel ruled that the CFTC will be responsible for this matter, not the NJDGE, at this point in time
- However, the $100,000 bond does reflect the maximum fine applicable under the Sports Wagering Act
The New Jersey District Court has granted a temporary restraining order and preliminary injunction in Kalshi’s favor against the New Jersey Division of Gaming Enforcement (NJDGE).
On 28 April, Judge Edward S. Kiel approved the motion that would prevent the NJDGE or the New Jersey Casino Control Commission from “pursuing civil or criminal enforcement actions against Kalshi concerning its sports-related event contracts”.
As per the request, Kalshi will be responsible for securing a $100,000 bond from the Clerk’s Office.
Judge Kiel explained that the Commodity Futures Trading Commission (CFTC) certified Kalshi as a designated contract market in 2020, and despite Kalshi now offering sports contracts, the “CFTC has not reviewed or prohibited Kalshi’s sports-related contracts despite possessing the authority to do so”.
One of the major points of contention is that Kalshi allows sports-related contracts on college basketball tournaments, while the New Jersey Constitution does not allow wagering “on a college sport or athletic event that takes place in New Jersey or on a sport or athletic event in which any New Jersey college team participates regardless of where the event takes place”.
Despite the NJDGE pointing out the fact that Kalshi is facilitating the act of placing money on the outcome of a sports game, Judge Kiel ruled that “finally, I am persuaded that Kalshi’s sports-related event contracts fall within the CFTC’s exclusive jurisdiction and am unconvinced by defendants’ arguments to the contrary.”
“Because I found above that Kalshi has established a likelihood of success in demonstrating that New Jersey law is preempted as applied to its sports-related contracts, I also conclude that the interests favor injunction.
“Limited to Kalshi’s alleged continuing violations of New Jersey law, Kalshi – as noted in Hendrick – proceeds at its own peril.”
Good to know: The case has been ongoing since 29 March, but this is not the only case Kalshi is currently fighting. The prediction market operator has also has lawsuits in Nevada, Ohio, Illinois and Maryland
The judge continues that if the NJDGE are proven correct further down the line, then they will be able to proceed with enforcement actions – but as of yet they have not been proven correct.
The minimum bond that could have been placed against Kalshi is $10,000, but this was raised to $100,000 in Kalshi’s case.
As Judge Kiel explained, “This sum is intended to mirror that of the maximum fine of a violation under the Sports Wagering Act.”
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