Robinhood Derivatives LLC has filed federal lawsuits against state regulators in both Nevada and New Jersey, accusing them of obstructing the company’s efforts to offer sports-related event contracts through its prediction markets platform. The legal challenges were submitted on August 19 in the U.S. District Courts for the Districts of Nevada and New Jersey.
Robinhood Fights Back Against State Interference in Sports Event Trading
The move follows Robinhood’s recent rollout of contracts linked to professional and college football outcomes on KalshiEx LLC – a derivatives exchange that has operated under theCommodity Futures Trading Commission (CFTC) as a designated contract market for nearly five years. These event contracts enable users to trade on the outcomes of specific future events, including sports competitions and political elections.
According to Robinhood’s complaints, the company is facing an “immediate threat of civil penalties and criminal prosecution” after activating access to these contracts in Nevada and New Jersey without reaching regulatory agreements with local gaming authorities. The suits are aimed at preventing these state regulators from applying gambling laws to a platform Robinhood insists is federally regulated and legally distinct from traditional wagering operations.
“If states could regulate some but not all entities relevant to these transactions, such regulation would infringe on the CFTC’s exclusive jurisdiction and fracture what Congress intended to be a uniform set of regulations for commodity futures and swaps trading,” Robinhood argued in its court filings.
Precedent and Parallel Legal Disputes
Robinhood’s legal approach mirrors an earlier case involving Kalshi itself, which faced similar regulatory resistance. However, Kalshi successfully secured preliminary injunctions from federal courts in Nevada and New Jersey earlier this year, with judges in both states ruling the exchange was likely to prevail on its argument that federal oversight by the CFTC preempts state gambling laws. In contrast, a federal court in Maryland recently ruled against Kalshi, denying the platform similar relief and setting up a potential jurisdictional conflict.
While the legality of prediction markets remains a grey area under U.S. law, particularly concerning sports-based contracts, Robinhood maintains that its activities fall squarely within the regulatory framework established by federal commodities law.
Federal vs. State: A Jurisdictional Clash
The lawsuits represent a high-stakes clash between federal oversight and state-level regulatory authority. Robinhood contends that state enforcement of gaming laws on CFTC-registered platforms undermines the nationally uniform system envisioned by Congress. The company is represented by Cravath, Swaine & Moore LLP, with Pisanelli Bice PLLC serving as local counsel in Nevada and Chiesa Shahinian & Giantomasi PC handling proceedings in New Jersey.
Commenting on the legal filings, a Robinhood spokesperson stated: “Our event contracts, including those for pro and college football, are offered in a compliant, federally regulated way through our CFTC registered Futures Commission Merchant, Robinhood Derivatives.” The spokesperson added, “This is a decisive step forward in our mission to democratize finance for all and unlock even more innovative market opportunities for investors.”
Attorneys general offices in both Nevada and New Jersey declined to comment on the pending litigation.
Source:
“Robinhood Sues Nevada, New Jersey Over Sports Wager Threats”, news.bloomberglaw.com, August 19, 2025
The post Robinhood Takes Legal Action Against Nevada, New Jersey Over Sports Contracts first appeared on RealMoneyAction.com.