Robinhood has filed suit in Massachusetts federal court against Attorney General Andrea Joy Campbell and the Massachusetts Gaming Commission, seeking to prevent the state from applying gaming laws to event-contract trading on its platform.
The complaint seeks declaratory and injunctive relief and challenges the state’s authority under the Supremacy Clause.
Robinhood, which has also previously filed a similar lawsuit against the New Jersey Division of Gaming Enforcement, explained that it provides customers with access to event contracts, including those linked to sports, through its platform.
While users place orders via Robinhood, the trades are executed on KalshiEx LLC, a federally regulated exchange overseen by the Commodity Futures Trading Commission (CFTC).
Robinhood acts as an intermediary and is registered with the CFTC as a futures commission merchant, subject to extensive federal oversight.
The lawsuit comes just days after Massachusetts filed a case against Kalshi, alleging that it was offering unlicensed sports wagering and seeking to halt such activity.
In that action, the state specifically referenced Robinhood, noting that Kalshi’s event contracts were accessible through its app.
According to that complaint, about $1bn in Kalshi wagers were traded through Robinhood in the second quarter of the year, generating roughly $10m in revenue for Kalshi.
Robinhood argues that the Commodity Exchange Act grants the CFTC exclusive jurisdiction over commodity futures, swaps, and event contracts traded on designated exchanges.
By attempting to regulate such federally authorised activity, the company claims Massachusetts is intruding on a field reserved for federal regulators.
Mounting legal battles for prediction markets
The filing highlights recent federal court decisions in New Jersey and Nevada where Kalshi successfully obtained injunctions blocking state enforcement efforts. Robinhood has filed its own actions in those states as well.
The company warned that without court intervention, it faces imminent civil and potentially criminal penalties, reputational damage, and the loss of service to more than 31,000 Massachusetts customers.
It also asserted that obtaining a state sports wagering licence would be impractical because the trades are already federally approved and subject to uniform CFTC regulation.
Robinhood added that shutting off access in Massachusetts would result in significant unrecoverable losses and harm its reputation and customer goodwill.
The dispute highlights a growing legal clash over prediction markets and how they should be classified.
Several state regulators have said they view sports-related event contracts as gambling subject to their laws, while Robinhood and Kalshi, as well as other platforms beginning to emerge on the scene, insist they are financial derivatives under federal jurisdiction.
Several lawsuits involving prediction market platforms are currently being debated at various levels. So far, while there seems to be some support for the platforms, the cases remain largely wide open with no clear winner.