Robinhood has filed a federal lawsuit against the Massachusetts Gaming Commission (MGC) and Attorney General Andrea Joy Campbell, aiming to stop the state from interfering in its trading of sports-related event contracts. Filed on September 15 in the U.S. District Court for Massachusetts, the complaint seeks a court order to block the state from applying local laws to activities Robinhood argues are under federal jurisdiction.
At the heart of the case is Robinhood’s partnership with KalshiEX, a Commodity Futures Trading Commission (CFTC) – licensed exchange. Robinhood serves as a futures commission merchant (FCM), allowing users to trade event contracts through its interface, while Kalshi operates the underlying exchange. Robinhood claims its role is limited to facilitating access and that it does not run the market itself.
“The user interface is Robinhood’s instead of Kalshi’s, which is convenient for Robinhood customers but does not affect the way in which trades are executed on Kalshi’s exchange or regulated by the CFTC,” the company stated in its legal filing.
Legal Standoff Over Jurisdiction and Definitions
The legal conflict stems from differing interpretations of what constitutes sports betting. Massachusetts regulators allege that Kalshi’s event contracts amount to illegal wagering under state law. On September 12, AG Campbell and the MGC filed a lawsuit against Kalshi, seeking to shut down its sports-related markets in the state.
“Sports wagering comes with significant risk of addiction and financial loss and must be strictly regulated to mitigate public health consequences,”Campbell said. “This lawsuit will ensure that if Kalshi wants to be in the sports gaming business in Massachusetts, they must obtain a licence and follow our laws.”
Robinhood, noting that its name appeared in the state’s suit against Kalshi, said it anticipates similar enforcement actions targeting its operations. With 31,000 users in Massachusetts, the company claims it would face immediate civil, criminal, and reputational consequences if the state moved forward.
“Robinhood therefore had no choice but to file this lawsuit to protect its customers and its business,” the company wrote in its filing.
Federal vs State Oversight at the Core of the Dispute
Robinhood argues that Massachusetts’ attempt to regulate its activity conflicts with the Commodity Exchange Act (CEA), which places authority over such contracts with the CFTC. By seeking an injunction and a declaration that state interference is unconstitutional under the Supremacy Clause, Robinhood is challenging Massachusetts’ ability to regulate federally overseen financial instruments.
The lawsuit names Campbell and all five MGC commissioners, including Chair Jordan Maynard, as defendants.
Robinhood emphasized that it is acting consistently with federal guidelines and previous legal strategies used in states like California, Nevada, and New Jersey, where similar challenges are ongoing.
Broader Regulatory Scrutiny and Legislative Backdrop
Massachusetts is not alone in targeting event contract platforms. Earlier in 2025, Secretary of State Bill Galvin’s office issued a subpoena to Robinhood as part of a broader inquiry. The state’s scrutiny aligns with a legislative trend, including House Bill 4431, introduced by Rep. David Muradian, which seeks to restrict online contests that simulate gambling.
Although event contracts are regulated at the federal level by the CFTC, their increasing resemblance to sports betting has prompted legal and political pushback in several jurisdictions.
Source:
“Robinhood sues Massachusetts Gaming Commission and AG”, x.com, “Daniel Wallach”.
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