Robinhood Takes New Jersey and Nevada’s Regulators to Court

Prediction markets platform Robinhood had filed lawsuits against the New Jersey Division of Gaming Enforcement and the Nevada Gaming Commission. These lawsuits come amid threats to block Robinhood’s products in the two states.

Robinhood Seeks to Protect Its Business

Earlier this year, the New Jersey regulator slammed Robinhood with a cease-and-desist order, alleging that its products constitute unlicensed sports betting. Robinhood, just like its partner Kalshi, insists that its products are not betting. As businesses regulated by the Commodity Futures Trading Commission (CFTC), both Kalshi and Robinhood have rejected the notion that they should answer to state gaming regulators.

With the latest court filings, Robinhood is seeking to protect its growing operations from the reach of gambling regulators in Nevada and New Jersey. While Kalshi previously secured preliminary relief in New Jersey, the regulator ruled out a scenario in which it doesn’t take regulatory action against Robinhood.

The NJ complaint suggests that Robinhood met with representatives of the local regulator earlier this year but failed to negotiate a second meeting. As a result, Robinhood resumed its operations and is now seeking protection from potential penalties.

Robinhood is also seeking protection from regulatory action in Nevada, whose Gaming Commission has remained strongly opposed to prediction markets.

Prediction Markets Face Regulatory Pressures

Prediction markets allow players to buy stocks in the outcomes of certain events, which may include, but are not limited to, politics, sporting events and legal decisions. The political markets have greatly expanded such platforms’ popularity due to the public’s increasing involvement in politics.

However, the availability of sports futures contracts has irked state regulators, traditional sportsbooks and tribal operators alike. Many have suggested that prediction markets are virtually indistinguishable from sports betting, meaning that their availability infringes on regulated operators’ rights.

For context, prediction markets platforms, as CFTC-regulated entities, can operate in all states without having to navigate the US’s complex regulatory landscape.

Robinhood Adds Football to Product Range

While the regulatory pressure against prediction markets continues, Robinhood has continued to expand its offering. The business just announced the inclusion of professional and college football to its range of prediction options.

The company said that the addition of football, which is the most popular sport in the US, was a “no-brainer.”