Gross New Jersey sports betting revenues slid to $71.3 million, a sharp 20.5% dip compared to the same month last year. It’s the latest chapter in an unsettling start to 2025 for Garden State sportsbooks, which have now seen revenues decline by nearly 19% year-over-year across the first quarter.
But while seasonal trends and reduced betting volume explain part of the slump, regulators and operators alike may be looking closely at emerging competition from unregulated — or at least unconventionally regulated — markets like Kalshi and Robinhood.
Fewer Bets, Smaller Profits — and the Shadow of Prediction Markets
Despite clearing $1.11 billion in total handle, New Jersey sportsbooks were operating with slimmer margins in March. The handle was down 16.5% year-over-year, marking a $220 million drop from March 2024.
Revenue from online books hit $68 million (down 20.6%), and retail sportsbooks contributed just $3.3 million (down 17.3%). FanDuel led all operators with $23.4 million in revenue, though that too reflected a 20.7% dip. DraftKings and BetMGM followed, posting $19.9 million and $8 million respectively, both down from last year.
While the declining numbers point to broader fatigue in the market following the Super Bowl and NFL playoffs, another factor may be diverting dollars away from licensed books: alternative betting avenues disguised as financial instruments.
Platforms like Kalshi, which began offering sports-related contracts around the Super Bowl and ramped up activity during March Madness, found themselves in hot water with New Jersey regulators just as the NCAA tournament reached its peak.
On March 27, the New Jersey Division of Gaming Enforcement (NJDGE) issued cease-and-desist letters to both Kalshi and Robinhood, warning that their sports event contracts were in violation of the state’s Sports Wagering Act.
The move came as Kalshi was allegedly offering markets on games being played in Newark — events that regulated sportsbooks were barred from touching due to local restrictions on betting on in-state college games.
The NJDGE letter accused the platforms of listing
“unauthorized sports wagers for individuals located within the state of New Jersey,”
with the threat of further enforcement if they failed to comply by March 28.
Robinhood responded by pulling NCAA-related contracts for New Jersey users, while Kalshi responded with a lawsuit, arguing that its operations are federally regulated by the Commodity Futures Trading Commission (CFTC) and immune to state-level enforcement.
“This action challenges the state of New Jersey’s intrusion into the federal government’s ‘exclusive’ authority to regulate futures derivatives trading,”
Kalshi said in its filing. The firm has declined to void bets or halt activity beyond what’s required, suggesting this legal showdown is far from over.
Regulatory Grey Zones Could Be Draining the Regulated Market
The situation has exposed a key vulnerability for states like New Jersey, which have built robust regulated wagering ecosystems — only to watch financial-style platforms emerge without clear legal boundaries. While FanDuel and DraftKings continue to lead in revenue, they’re now competing with federally backed alternatives that operate outside state tax structures and licensing frameworks.
“Kalshi believes in the value of regulation,”
a spokesperson stated,
“and operates under the comprehensive oversight of the Commodity Futures Trading Commission.”
But for state regulators, that oversight doesn’t address lost tax revenue or the consumer protection void left behind.
With $9 million collected in taxes from legal sportsbooks in March 2025, any leakage to unlicensed or parallel markets — especially during a month as high-profile as March Madness — could have serious fiscal implications.
