Robinhood’s derivatives division has filed lawsuits against gaming regulators in Nevada and New Jersey, aiming to block potential enforcement actions over its sports event contracts.
According to two complaints lodged on Tuesday against the states’ regulators and attorneys general, Robinhood said it began offering these contracts after federal courts earlier this year cleared rival prediction market Kalshi to do so.
The company argued that despite those rulings, Nevada and New Jersey are still trying to prevent it from offering the contracts, even though courts have barred them from taking similar action against Kalshi.
Kalshi itself had sued both states in March after receiving cease-and-desist letters, claiming it was already regulated by the U.S. Commodity Futures Trading Commission (CFTC). Federal judges sided with Kalshi, blocking enforcement while the lawsuits continue.
Robinhood warned it would be unfairly disadvantaged if regulators are allowed to restrict its operations while Kalshi continues, saying it could lose ground in the growing sports event contracts market.
These contracts let users wager on outcomes of events, from sports matches to elections, and are designed to provide transparency and resolution mechanisms, sometimes drawing on blockchain technology.
Robinhood Warns of Competitive Disadvantage
Robinhood argued that if Nevada and New Jersey regulators are allowed to act against it while leaving Kalshi untouched, the company would be put at a competitive disadvantage in the event contracts market.
Event contracts allow people to bet on the outcome of events, from sports games to elections, and often rely on blockchain tools to ensure transparency and resolve outcomes fairly. Robinhood said its platform enables users to place and settle such contracts, which are ultimately traded on Kalshi.
The company claimed it was forced to sue because both states have ignored federal court rulings suggesting that their enforcement efforts may be preempted by federal law. “Robinhood had no choice but to file this lawsuit to protect its customers and its business,” the firm stated.
Regulators push back
In its filings, Robinhood said regulators in both states rejected its arguments.
In New Jersey, Robinhood told the Division of Gaming Enforcement that, given the court’s decision favoring Kalshi, it should also be allowed to offer event contracts through the same channel. However, according to the lawsuit, state officials replied that they could not promise to hold off on enforcement action, even with the court’s order in place for Kalshi.
Robinhood also alleged that regulators failed to engage with its attempts to resolve the matter, claiming officials did not respond to repeated requests for a meeting.
