tl;dr
Robinhood's derivatives division has sued regulators in Nevada and New Jersey to block enforcement actions against its sports event contracts. Despite federal court rulings allowing Kalshi, a prediction market, to sell similar contracts, state regulators continue to target Robinhood’s offerings. Rob...
The derivatives division of Robinhood has launched lawsuits against regulators in Nevada and New Jersey, aiming to prevent enforcement actions targeting its sports event contracts. The company initiated offerings in these states following federal court rulings that allowed Kalshi, a prediction market, to sell similar contracts. Robinhood argues that despite these rulings, state regulators continue efforts to block its offerings, creating unequal treatment compared to Kalshi.
Kalshi had previously sued Nevada and New Jersey gaming regulators over cease-and-desist letters related to its sports betting contracts, with federal courts siding with Kalshi and halting regulatory enforcement. Robinhood claims that barring it from providing these contracts while allowing Kalshi to do so causes competitive harm, as it would lose market share in the sports event contracts sector.
Event contracts, which enable betting on the outcomes of events such as sports games or elections, are rooted in blockchain technology to ensure transparency and verifiable resolution. Robinhood’s platform facilitates the trading of these contracts via Kalshi, but faces regulatory pushback. The company maintains that state enforcement efforts are likely preempted by federal law, leaving it no choice but to pursue legal action to safeguard its customers and business interests.
Regulators in both states have rejected Robinhood’s requests to refrain from enforcement actions. In New Jersey, officials declined to agree to a moratorium despite federal court decisions favorable to Kalshi, and ignored repeated requests to discuss the matter. Similarly, Nevada’s Gaming Control Board warned Robinhood that offering these contracts could be deemed “wilful violations” of law, rejecting proposals for temporary access for state residents.
In response, Robinhood has filed for temporary restraining orders to prevent state enforcement and seeks court injunctions to bar regulators from acting against its derivatives business. The lawsuits highlight ongoing tensions between state-level gaming authorities and federally regulated prediction markets in the evolving landscape of event contract trading.