NJ issues cease-and-desist to Kalshi, more

Welcome to iGB’s State of the Union, your authoritative source for the latest developments in North American sports betting. This edition encapsulates key stories and noteworthy updates from the week, providing insights for industry professionals and enthusiasts alike.

Robinhood Suspends NCAA Contracts in New Jersey

In a significant development just hours before the Sweet 16 games of the NCAA men’s tournament on March 27, the New Jersey Attorney General’s office issued a notice to Kalshi and Robinhood regarding alleged facilitation of “unauthorized sports wagers” within state boundaries. During the opening weekend of March Madness, Kalshi users reportedly placed nearly $250 million (£193.1 million/€230.8 million) on event contracts nationwide.

The communication from the Attorney General’s office urged the exchanges to void all NCAA event contracts entered into by New Jersey residents. This notice came shortly before four regional semifinal matchups. To the surprise of some insiders in prediction markets, Robinhood chose to comply by ceasing new user contracts related to the NCAA tournament that very evening.

In a statement released on the same night, Robinhood announced its decision to stop allowing new positions on NCAA tournament contracts. Industry analyst Dustin Gouker remarked, “No more college hoops betting at Robinhood in NJ. I’m curious about Kalshi’s next steps. They can’t simply withdraw from states without legal proceedings.”

This year’s NCAA regionals, held in Newark for the first time since 2011, reveal a regulatory challenge: New Jersey’s law prohibits legal sports wagering on college events. Ahead of the semifinals, Duke star Cooper Flagg noted his teammates faced backlash from frustrated bettors on social media about various betting props.

Despite the compliance issues, Kalshi continued to offer in-game event contracts on the Alabama-BYU matchup, where a contract predicting an Alabama victory reflected an 84% probability. However, to win $100 on this market, users had to stake over $650, highlighting the intricacies involved in derivatives trading within the sports betting landscape.

Nevada Commission Sanctions Resorts World Las Vegas

The Nevada Gaming Commission (NGC) has approved a stipulated settlement with Resorts World Las Vegas on March 27, resolving a comprehensive 12-count complaint regarding the casino’s alleged failures in anti-money laundering (AML) protocols. The commission levied a substantial $10.5 million fine, marking it as the second-largest penalty in Nevada’s history.

This settlement, approved unanimously by the commissioners, is a fraction of the $20 million fine imposed on Wynn Resorts in a previous misconduct case. The RWLV investigation focused on compliance deficiencies linked to two illegal bookmakers, including Matt Bowyer, who is accused of processing over $325 million in wagers through the casino.

The stipulated agreement includes a commitment to enhanced compliance reviews, required to be submitted within two years. Commissioner Brian Krolicki underscored the lack of oversight within the casino’s operations, asserting that this case should serve as a precautionary example for the entire Strip regarding AML compliance.

Moreover, the NGC retains authority to reopen investigations if new findings arise from ongoing federal inquiries, emphasizing the seriousness with which the state approaches compliance issues.

Oklahoma Sports Betting Bills Advance Amidst Governor’s Opposition

In a remarkable legislative move, several bills aimed at legalizing sports betting passed through the Oklahoma legislature despite Governor Kevin Stitt’s commitment to veto any measures favoring tribal exclusivity in gaming licenses.

Among these, House Bill 1047, introduced by Representative Ken Luttrell, would allow for the amendment of tribal gaming compacts to include provisions for sports wagering. The second bill, HB 1101, proposes a state referendum on legalizing sports betting. Under these measures, Oklahoma would collect 10% of operator revenues from sports wagering.

Governor Stitt criticized these bills, asserting they primarily benefit tribal entities rather than citizens of Oklahoma. However, the legislature holds the power to override his veto with a two-thirds majority vote.

Additionally, Senate Bill 585 has passed, granting the Oklahoma City Thunder the ability to secure a sports betting license, capitalizing on the NBA’s thriving audience as they lead the league with a 61-12 record and are favorites for the 2025 championship.

Bet365 Exits Chinese Market, Shifts Focus Toward Regulated Revenue

Bet365 has officially announced its withdrawal from the Chinese market, which may pave the way for potential mergers and acquisitions. The company’s longstanding controversial “grey market” activities in China have now been halted. Analysts from Regulus Partners noted that with Brazil’s recently regulated market, China was bet365’s last notable unregulated territory.

This strategic exit positions bet365 as a contender in domestically regulated markets, where over 90% of its revenue is currently generated. In the fiscal year concluding March 2024, bet365 reported revenues of £3.7 billion, reflecting a 9% increase from the previous year, with considerable operating profits of £397 million. Industry insiders speculate a valuation for bet365 nearing $10 billion based on projected EBITDA multiples.

Currently operational in 13 U.S. states, bet365 recently partnered with the St. Louis Cardinals, marking its entry into the MLB sponsorship arena, a significant step forward as Missouri prepares to launch sports betting.

Industry Highlights from iGB

• Sports Illustrated ventures into the prediction market space following unsuccessful attempts to launch a regulated sportsbook.
• Tilman Fertitta increases his stake in Wynn Resorts, despite pledging to step back from certain interests for his ambassadorial role.
• Start-up Underdog achieves a valuation exceeding $1 billion after a successful Series C funding round.
• Kalshi introduces responsible gaming tools and partners with IC360 ahead of an upcoming industry roundtable.
• A Bronx community board expresses opposition towards Bally’s New York gaming proposal.
• Campaign contributions play a critical role in Hawaii’s ongoing discussions around gambling legislation.