Robinhood Derivatives has taken legal action against regulators in Nevada and New Jersey, accusing the states of unfairly blocking its entry into the sports event contracts market despite recent federal court rulings in favor of rival platform Kalshi.
Key Takeaways:
- Robinhood sued Nevada and New Jersey regulators, alleging they blocked its event contracts despite federal rulings favoring Kalshi.
- The company argues regulators are ignoring court orders, creating an uneven playing field in the sports event contracts market.
- Robinhood is seeking court orders and temporary restraining orders to prevent enforcement actions while its lawsuits proceed.
In complaints filed Tuesday, Robinhood said it began offering event contracts in both states after federal judges ruled earlier this year that Nevada and New Jersey gaming regulators could not enforce their bans against Kalshi, which offers contracts regulated by the U.S. Commodity Futures Trading Commission (CFTC).
Robinhood Claims Regulators Creating Uneven Playing Field
Robinhood argued that regulators have ignored those rulings and continued to threaten enforcement action, creating an uneven playing field.
“If state regulators are permitted to act against Robinhood but not Kalshi, then Robinhood will lose out in the sports event contracts space,” the company said in its filings.
The lawsuits follow Kalshi’s own legal battles earlier this year. The prediction market sued both states after receiving cease-and-desist letters over its sports betting contracts, contending that federal oversight by the CFTC preempted state gambling laws.
Federal courts sided with Kalshi and barred state regulators from intervening, though both cases remain active.
Robinhood now claims the same protection should apply to its derivatives platform, which facilitates trading of event contracts that ultimately settle on Kalshi.
These contracts allow users to speculate on outcomes ranging from sports games to elections and are pitched as a way to bring more transparency and truth-resolving mechanisms into markets.
In its New Jersey complaint, Robinhood said it contacted the state’s Division of Gaming Enforcement to confirm it could operate under the court’s Kalshi ruling.
Officials allegedly refused to commit to standing down and did not respond to multiple follow-up requests for meetings.
A similar clash unfolded in Nevada, where Robinhood claims the state’s Gaming Control Board warned it would treat any offering of event contracts as “willful violations” of law, despite a local federal court siding with Kalshi.
In both cases, Robinhood has asked the courts to issue orders preventing regulators from acting against it.
The company is also seeking temporary restraining orders to shield its business while the suits move forward.
Robinhood Faces EU Scrutiny Over Controversial Tokenized Stock Launch
Meanwhile, Robinhood has come under regulatory fire in the EU after launching tokenized stock products linked to private companies like OpenAI and SpaceX.
The Bank of Lithuania confirmed it is investigating the legality and investor disclosures related to these blockchain-based “Stock Tokens,” which launched on June 30.
OpenAI publicly disavowed any connection, stating it never approved the tokens and warning investors to be cautious.
The controversy escalated when Elon Musk, reacting to OpenAI’s denial, labeled the firm’s equity “fake,” but did not directly address the SpaceX tokens.
Robinhood clarified that its tokens are not actual shares but price-tracking derivatives issued on Ethereum’s Arbitrum network, available only in the EU.
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