New Jersey is both a trailblazer and a bit of a prude when it comes to sports betting.
The Garden State was in the vanguard of the effort that led to the widespread legalization of sports wagering in the United States. New Jersey also has more than a dozen online sportsbooks taking action in one of the most active markets in the country.
But betting on Rutgers or Princeton? Now, that was a bridge too far for policymakers in New Jersey. The state has banned betting on in-state colleges or college games played in the state since its 2018 launch of legalized event wagering.
New Jersey was even given the chance to rethink that prohibition, similar versions of which exist in other states. In 2021, a ballot measure asked New Jersey voters if they’d like to amend the state constitution and allow wagering on all college sporting events. And, at the end of the day, 57% of voters said no.
Well, guess what, New Jersey voters? You got it anyway!
Vox populi, vox de-not going to happen
Yes, despite the desire of a majority of the New Jersey electorate to prohibit wagering on college sports within the state’s borders and on the state’s college teams, it’s still very much happening. And it will happen during March Madness, one of the busiest times of the year for sports bettors and sportsbooks.
Now, will this happen with sportsbook operators licensed by state regulators? No.
As I wrote about yesterday, people in New Jersey still won’t be able to use DraftKings or FanDuel to bet on Sweet Sixteen and Elite Eight games set to be played in Newark later this month. For those state-regulated sportsbooks, the voter-endorsed rules still very much apply.
The same goes in New York, where state residents will be blocked from betting on St. John’s at regulated sportsbooks because of a statutory prohibition against such wagering. In other words, New York has one of the best teams in the tournament and many in the state won’t be able to have a flutter on its chances.
But the rules only matter to those who agree to follow them. And not everybody agrees, including bettors who live in New Jersey or New York. They will show their disagreement by wagering on those forbidden games with apps and sites that exist outside state-designed regulatory frameworks for sports betting.
There’s a loooooot of options players have in NJ that will offer these anyway. https://t.co/6hJpCcBFxP
— Alex Kane (@a_kane47) March 18, 2025
Alex Kane, the CEO and founder of the New Jersey-regulated sports betting exchange Sporttrade, noted as much on Twitter/X.
Kane also recently wrote an interesting open letter to U.S. sports betting regulators, published by Steve Ruddock's Straight to the Point newsletter, which raised similar concerns.
“I’ve had the great privilege of speaking with thousands of sports bettors at this point, and I can’t recall one instance where that player makes any meaningful distinction between a sports betting platform regulated by a gaming commission, and one that is not, when deciding where to play,” Kane wrote. “They simply do not care.”
Kane rattled off a list of other “books” that players have compared Sporttrade to, including Bovada (an offshore sportsbook), Polymarket (offshore prediction market), Fliff (sweepstakes sportsbook), and Kalshi (onshore prediction market), among others. None of those are regulated and authorized to do business in New Jersey as a sportsbook.
“To the player, there are no ‘unregulated options’ versus ‘regulated options,’” Kane wrote. “There are simply ‘options.’”
Man plans and gamblers laugh
Now, my read of the letter is that Kane was writing more about regulation and taxation stifling innovative forms of sports wagering. However, I think the points also apply to states with restrictions on college sports betting.
Those rules, such as no betting on in-state colleges, are becoming more and more irrelevant. And that's because they do not actually stop that kind of betting on college sports via newer forms of gambling such as prediction markets and online sweepstakes.
Take Kalshi, for example. It’s a federally regulated exchange (or prediction market) that is available in all 50 states and offers de facto wagering on March Madness.
Users "bet" by buying a "yes" or "no" contract connected to a certain outcome, such as paying 58 cents for a contract that says Louisville will beat Creighton in the first round of the NCAA tournament. If that happens, the holder of that contract gets another 42 cents. They can also buy or sell those contracts up until the game is over.
So a Kalshi user in New Jersey could buy or sell event contracts tied to the college basketball games played in Newark later this month, making or losing money depending on the outcome and their trading skills. This would happen despite the state’s voters saying they do not want that sort of thing going on.
Duke's big dance odds hit another all time high of 25%
— Kalshi (@Kalshi) March 19, 2025
The rest of field combined: 75%
The amount of sports wagering with Kalshi, which really rose to prominence by facilitating bets on last November's presidential election, is relatively light.
Yet Kalshi has formed a partnership with the uber-popular trading platform Robinhood that will now allow users of the latter to trade sports contracts provided by the former, potentially giving a shot in the arm to the betting volume.
"If you don’t think this is a seminal moment in US sports betting, I don’t know what to tell you," gambling industry consultant Dustin Gouker wrote in his newsletter earlier this week. "You can now BET ON THE OUTCOME of COLLEGE SPORTS GAMES in ALL 50 STATES via a platform with 25 MILLION USERS. I mean, please go read that sentence again."
Now, Kalshi believes it has federal law on its side for this (its regulator, the Commodity Futures Trading Commission, hasn't said otherwise yet), preempting state-level oversight of sports gambling.
As a result, Kalshi will facilitate de facto bets on college sports even when voters, state regulators, and local law don’t want it to happen in their backyards. That includes states where sports betting hasn't been legalized at all.
"In addition to posing an unfair economic threat to sportsbook operators who have invested in pursuing licensure and regulatory compliance on a jurisdiction-by-jurisdiction basis, the introduction of a 'national' sports betting product severely undermines state regulatory authority while also jeopardizing state tax revenue," an official from the American Gaming Association said in a letter to the CFTC last month.
And Kalshi is an entity that is actually subjecting itself to U.S. regulation, albeit at the federal level. Sweepstakes sportsbooks like Fliff are also abiding by U.S. laws that they see as allowing for their way of doing business, even in states where lawmakers may not want those bets taken.
Shorely shome mishtake?
There is then a whole other world of offshore betting that doesn’t come into the ballpark of stateside oversight. These books were already eroding any attempt to ban certain types of college sports betting before a prediction market like Kalshi even became something for state regulators to think about.
Investment banking firm Citizens reported earlier this week, citing data from Juice Reel, that an estimated $163 billion was wagered with offshore sportsbooks and (unregulated) bookies last year within the United States. That was more than the $150 billion wagered with legal sportsbooks.
“There has been a lot of talk around certain DFS, player prop markets, and sweepstakes in recent years, and we understand it all adds to the total addressable market, but the largest source of money outside traditional sportsbooks is from offshore platforms (i.e., Bovada) and online bookies,” Citizens analyst Jordan Bender wrote in a note to clients.
How many of those millions or billions are being bet offshore on March Madness? Probably a lot.
Last week, the American Gaming Association estimated that U.S. residents will "legally" wager $3.1 billion on the men's and women's college basketball tournaments this year, up from $2.7 billion in 2024.
In 2023, however, the AGA estimated there would be $15.5 billion bet on the men's tourney alone. That included money staked with sportsbooks, like the 2025 estimate, but also wagering on bracket contests, casually among friends, and "with a bookie."
In other words, a good chunk of change was expected to be bet outside of regulated channels and, no doubt, with offshore sportsbooks. And, again, this was even before Kalshi and certain sweeps operators arrived on the scene.
Mole hunt
Now, state regulators are very much awake to the issue. They're trying to stop it. A number of cease-and-desist letters have been sent to offshore entities, Bovada especially.
Lawmakers and regulators are also trying to rein in sweeps operators. In New York, for example, one state senator's bill takes aim at sweeps that simulate "casino-style gaming," the definition of which includes sports wagering.
"Online real money ‘sweepstakes casinos’ have recently become widely available in New York over the internet on mobile devices and personal computers, including to minors,” Sen. Joseph Addabbo Jr.'s sponsor memo says. “They present unfair competition to the state's legal, highly regulated and economically important casinos."
Nevada has even asked Kalshi to knock it off after deciding its sports and election contracts represent unlawful gambling activity.
So, will this put an end to wagering outside of state-regulated sportsbooks. Definitely not.
“Recent moves by states to ban offshore books through cease and desist letters are a step in the right direction, but we ultimately believe it is a game of 'whack-a-mole', with no actual recourse toward the individuals running the illegal book,” Citizens’ Bender wrote.
Walking a fine line
Granted, those remarks are directed more at offshore sportsbooks than onshore alternatives. But it’s right about here where we reach the rub.
People want to bet on sports. They also want to bet on sports when state lawmakers and regulators do not think it's appropriate.
And there are legitimate reasons why states and the NCAA don’t want wagering on in-state colleges or college player props, which is why the rules are there. The concerns include that college athletics and athletes could be more susceptible to manipulation and that the players are more vulnerable to abuse and harassment.
Will every sports bettor find this reasonable and cause enough to not bet on something? Absolutely not. And if someone wants it bad enough, there is someone else standing by to take their bet in some way, shape, or form. It just won't be under the oversight of a state gaming commission.
So this is the seemingly impossible task facing lawmakers and regulators: How do you strike the perfect balance of giving sports bettors what they want from a state-regulated sportsbook – thus ensuring gambling remains under your oversight and subject to taxation – while ensuring you don’t create the concerns that led you to restrict certain forms of wagering in the first place?
This obviously goes beyond just whether or not to allow betting on in-state colleges or college player props. Massachusetts Gaming Commission chair Jordan Maynard indeed highlighted the dilemma during a panel last week at the NEXT iGaming and sports betting conference in New York.
The toughest thing for regulators is to stay on top of changing technology, according to Maynard. Operators are often ahead of where they want regulators to be, he said, and that is usually because they are being prompted by some innovation in the unregulated and illegal markets.
So regulators are playing “catchup,” Maynard said. However, they also need to ensure that legal operators can offer a good product to keep players in the regulated system and not in an unregulated one where gaming commissions have no line of sight.
“The biggest thing, I think, is that we need to continue as regulators to make sure that patrons know that our licensees are the best place to go to gamble,” Maynard said.
Coincidentally enough, a report released during the NEXT conference showed that two of the five top online gambling brands in Massachusetts are Bovada and BetOnline, which aren't regulated by the state. That suggests some Bay State residents believe a better sportsbook awaits them outside of MGC-approved channels.
And, as it happens, Massachusetts prohibits its licensed sportsbooks from taking bets on the state’s colleges. However, the commonwealth does have an exception to that rule, in that it can be allowed if it’s for a tournament like March Madness.
No risk, no reward
So, could other state lawmakers also say, hey, there’s a chance there’s gonna be a big game that our constituents aren’t going to be able to bet, and we should probably build in a little flexibility to let it happen? Hypothetically, yes, although a recent public opinion survey suggests the majority wants no part of betting on college sports.
More broadly, Sporttrade's Kane suggested regulators should lean into “risk-based” regulation over “rules-based” regulation, for which he cites the Alcohol and Gaming Commission of Ontario (AGCO) as an “excellent” example.
The AGCO has “standards” for iGaming, which in Canada means both online sports betting and online casino gambling. And instead of a catalog of sporting events and leagues that can and can't be offered by bookmakers, the AGCO has criteria that must be met instead. That ranges from ensuring bettable outcomes "can be documented and verified" to prohibiting events that involve animal cruelty.
The only specific league mentioned as being offside for sportsbook operators is the Canadian Hockey League, which is the umbrella organization for junior hockey leagues and their 16 to 20-year-old players.
While it's a firm "no" on something that is popular for many people (like college sports), operators still have a lot of flexibility in offering betting markets to consumers.
“If new and exciting forms of sports betting aren’t welcomed by virtue of your rigid rules-based approach, those innovative ideas will instead flourish under alternative regulatory frameworks, pulling increasingly more players out of your market,” Kane wrote.
The cost of caring
Thinking about all of the above can be a headache, but it’s a headache you get from caring enough to legalize and regulate sports betting in the first place.
People love sports, they love betting on sports, they love college sports, they love March Madness, and they love betting on March Madness. And when you try to get between people and their passions, such as by blocking them from betting on the team they are passionate about, they will try to find a way to get around you.
Maybe by next year’s March Madness some or all of these problems will be solved, either by legal and regulatory intervention or by the self-regulation of companies.
However, given the pace of change in the gambling industry (legal and illegal), it seems more likely that there will just be another avenue or issue or format that is causing headaches.
The game of “whack-a-mole” may never end. But maybe lawmakers and regulators will adopt a bigger mallet. And maybe – maybe! – the rules of the game can be tweaked just a bit. You know, just here and there.
The voters may not thank you. Some regulated bookmakers just might, though.
