Robinhood has sued the Massachusetts attorney general and gaming commission aiming to block the state from applying its gambling laws to sports prediction markets.
Trading platform Robinhood is looking to block Massachusetts from applying its gambling laws on the prediction markets it offers.
This week, Robinhood filed a lawsuit against the Massachusetts Attorney General and Massachusetts Gaming Commission (MGC) in the US District Court in Boston. Robinhood’s move is a response to the Massachusetts attorney general filing a suit in Suffolk Superior Court against prediction market platform Kalshi last week. Robinhood began offering Kalshi’s football prediction markets this season.
Robinhood is looking to preempt any potential MGC gambling enforcement against sports prediction markets. It argues gambling laws do not apply because the markets it offers come from Kalshi, which is federally regulated by the Commodity Futures Trading Commission (CFTC). It argues intervention from the state would violate the Commodity Exchange Act.
Massachusetts prediction markets lawsuit against Kalshi
State Attorney General Andrea Campbell’s suit alleges Kalshi is promoting and accepting online sports betting through its platform without conforming to the commonwealth’s laws. In the suit, the AG requested a court order for Kalshi to cease offering sports betting while the lawsuit is pending.
“Sports wagering comes with significant risk of addiction and financial loss and must be strictly regulated to mitigate public health consequences,” Campbell said in a release. “This lawsuit will ensure that if Kalshi wants to be in the sports gaming business in Massachusetts, they must obtain a licence and follow our laws. I am grateful for the ongoing partnership with the Gaming Commission.”
Both Robinhood and Kalshi are already in lawsuits across the country over the issue of whether prediction markets are sports betting. That includes legal cases in Maryland, New Jersey and California.
Kalshi previously secured initial injunctions to prevent state regulatory enforcement in New Jersey and Nevada. An outgoing CFTC commissioner also recently warned of weak oversight in the prediction market expansion.
Robinhood looks to protect business
It is not the first battle between Robinhood and Massachusetts. In January 2024, Robinhood paid a $7.5 million fine and agreed to change its practices after Massachusetts securities regulators claimed the company encouraged investors to place risky trades.
This March, Secretary of the Commonwealth Bill Galvin sent a subpoena to the trading platform after it launched a prediction markets hub, which included markets on the NCAA Tournament.
Robinhood said in its filing this week that it is a CFTC-registered futures commission merchant, which accepts customer money on orders. However, designated contract markets like Kalshi set and operate the markets.
“This means that while Robinhood customers are placing orders for event contract trades in their Robinhood accounts, the trades themselves are taking place on Kalshi’s CFTC-designated exchange,” the filing said.
Robinhood said that it believed because of its relationship with Kalshi and the prediction markets, the state might potentially file a similar complaint against it. The trading platform said such legal action and potential penalties could cause irreparable harm to the company, so it filed the suit to protect itself.
