Case 1:25-cv-14723 Document 1 Filed 08/19/25 Page 12 of 28 PageID: 12
concerning conflicts of interest. Id. § 1.71. Finally, the CFTC imposes recordkeeping requirements on FCMs. Id. §§ 1.14, 1.18. Failure to comply with these requirements could require the FCM to “transfer all customer accounts and immediately cease doing business as a futures commission merchant.” Id. § 1.17(a)(4). D. The Cease-and-Desist Letters and Kalshi’s Preliminary Injunction 33. On March 27, 2025, the Division sent Kalshi a cease-and-desist letter threatening to bring a legal action to prohibit Kalshi from any trading of sports-related event contracts in New Jersey. KalshiEx , No. 25-cv-2152, ECF No. 1-1, at 1. The Division asserted that Kalshi was “listing unauthorized sports wagers for individuals located within the State of New Jersey” without a license, in violation of the New Jersey Sports Wagering Act, N.J.S.A. § 5:12A-11. Id. It further asserted that Kalshi was “offering unauthorized sports wagering to New Jersey residents on collegiate sporting events occurring in New Jersey in violation of the New Jersey Constitution,” citing N.J. Const. art. IV, § 7, ¶ 2(D). Id. The Division demanded that Kalshi “immediately cease and desist from offering any form of sports wagering to New Jersey residents and void any such wagers already placed.” Id. The Division reserved “the right to pursue any appropriate sanctions” if Kalshi failed to comply with the cease-and-desist letter. Id. at 2. 34. Robinhood received a nearly identical cease-and-desist letter from the Division on March 27, 2025. Exhibit 1, at 1. This letter was signed by Defendant Flaherty, in her capacity as the Interim Director of the Division, and was sent from the Division’s Atlantic City office. Id. at 2. The letter copied the Deputy Director and Deputy Attorneys General of the Division and others. Id. at 2. The Division’s letter to Robinhood asserted the same violations of the New Jersey Sports Wagering Act and the New Jersey Constitution as the Kalshi letter; it also made the same demand that Robinhood “immediately cease and desist from offering any form of
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