Robinhood Seeks Federal Protection as Massachusetts Targets Sports Prediction Markets

Robinhood has launched a legal maneuver to protect itself from Massachusetts regulators. The company has asked a federal judge to prevent the state from enforcing gaming regulations on its growing sports prediction business. The filing closely follows a Massachusetts court ruling allowing enforcement action against Kalshi, placing prediction platforms aiming to operate in the state in a precarious position.

The Platform Challenges the Boundaries of State Authority

Robinhood’s argument centers around a familiar claim: that state gaming authorities are overstepping their reach into territory reserved for federal regulators. Robinhood claims that the sports event contracts it provides through its partnerships with Kalshi and ForecastEx fall squarely under the oversight of the Commodity Futures Trading Commission (CFTC). According to the company, the CFTC has exclusive authority over such contracts, making state intervention illegal.

According to a recent Bloomberg report, in its request for a preliminary injunction, Robinhood warned that allowing Massachusetts to enforce local regulations would damage national regulatory systems. The company cited previous rulings in New Jersey, Nevada, and California that sided with federal regulation, arguing that recent decisions in Maryland and Massachusetts depart from that precedent.

A similar challenge against Massachusetts last year failed after a judge ruled the case premature as Attorney General Andrea Campbell pursued litigation against Kalshi. The court reopened Robinhood’s case earlier this month after the company’s expanded partnership with ForecastEx, giving the platform another chance to press its preemption claims. 

Prediction Markets Remain Mired in Uncertainty

Nevada, a longtime opponent of prediction markets, is attempting to leverage the recent Massachusetts ruling.  The state’s attorney general has submitted the decision as supplemental authority in a Kalshi appeal, arguing that it undermines federal preemption claims. Nevada regulators are fighting against Polymarket, seeking court orders to prevent the platform from offering contracts they consider unlicensed betting.

The outcome of these legal battles could ripple beyond individual states like Massachusetts or Nevada. Prediction markets face enduring legal uncertainty, with some courts sympathetic to the argument that these products resemble financial instruments rather than sports bets. Others, meanwhile, argue that such platforms violate consumer protection rights established by state gaming regulations.

Meanwhile, international pressure against prediction markets is also mounting. Polymarket has recently been forced out of Portugal due to allegations of insiders profiteering from the recent election outcome. The platform has faced similar bans in France and Ukraine, where regulators cited concerns ranging from illegal gambling to potential market manipulation.