Robinhood Derivatives, the derivatives division of the popular trading platform Robinhood, has initiated legal action against gaming regulators and attorneys general in New Jersey and Nevada. The lawsuits aim to prevent potential enforcement actions targeting Robinhood’s sports event contracts.
These contracts, offered by Robinhood after federal courts earlier this year authorized prediction market Kalshi to do so, have caught the attention of state regulators. Despite court rulings that protect Kalshi from similar regulatory actions, Robinhood claims that the Nevada and New Jersey authorities are still attempting to block its offerings.
Robinhood alleges that the states’ efforts to halt its event contracts are unfair, especially since courts have barred regulators from taking enforcement actions against Kalshi in the same market segment. This ongoing dispute underscores a complex legal battle around sports-related event contracts in different jurisdictions.
Prediction markets, including event contracts, allow users to place bets on outcomes of events like sports games or elections. These markets often use blockchain technology to ensure transparency and accurate settlement of contracts.
Robinhood stresses that its platform enables users to trade these event contracts, many of which are linked to Kalshi’s offerings. The company emphasizes the potential harm to its business and customers if regulators target Robinhood without applying the same restrictions on Kalshi.
The disputes follow Kalshi’s own lawsuits against gaming regulators in March, challenging cease-and-desist orders issued over its sports betting contracts. Federal courts found merit in Kalshi’s case, halting regulatory actions in both New Jersey and Nevada.
In response, Robinhood has sought court orders to block similar enforcement efforts against itself, filing for temporary restraining orders in both states. The company has also reached out to New Jersey’s Division of Gaming Enforcement seeking dialogue but alleges that regulators refused to refrain from enforcement despite the existing court decisions favoring Kalshi.
Nevada regulators reportedly warned Robinhood that offering the sports event contracts in the state would be considered willful violations of the law. Robinhood’s attempts to offer the same products as Kalshi in Nevada were declined, escalating the legal contention.
As these cases continue to unfold, they highlight the challenges of regulatory alignment in the emerging world of blockchain-based prediction markets and event contracts.