Robinhood Seeks Federal Protection Against Massachusetts Sports Prediction Market Rules
Robinhood’s Legal Push Against Massachusetts Regulators
Robinhood has initiated legal action to shield itself from Massachusetts authorities who aim to apply state gaming rules to its expanding sports prediction market. The company has requested a federal judge to block the state’s enforcement of these regulations, following a court decision in Massachusetts that permitted action against Kalshi, thereby creating challenges for prediction platforms operating in the state.
Questioning State Authority Over Prediction Markets
Robinhood contends that Massachusetts gaming regulators are exceeding their jurisdiction by trying to regulate its sports event contracts. The firm points out that its partnerships with Kalshi and ForecastEx involve contracts that fall under the exclusive supervision of the Commodity Futures Trading Commission (CFTC). As such, Robinhood argues that only federal regulators have authority here, making any state-level enforcement unlawful.
In its petition for a preliminary injunction, Robinhood cautioned that letting Massachusetts impose local rules could disrupt established national regulatory frameworks. The company referred to prior decisions in New Jersey, Nevada, and California that sided with federal oversight, suggesting recent rulings in Maryland and Massachusetts diverge from this consistent precedent.
Robinhood’s earlier challenge against Massachusetts had been dismissed as premature while Massachusetts pursued legal action against Kalshi. However, the case was reopened after Robinhood broadened its partnership with ForecastEx, providing it a renewed opportunity to argue for federal preemption over state laws.
Legal Ambiguity Surrounds Prediction Markets
Nevada, known for its opposition to prediction markets, is seizing on the Massachusetts ruling to support its own legal challenges. Nevada’s attorney general has invoked the Massachusetts decision in an appeal related to Kalshi, arguing against claims that federal regulation should preempt state enforcement. Nevada regulators are also targeting Polymarket, seeking court orders to halt the platform’s activities, which they view as unauthorized gambling operations.
The ongoing legal disputes have broader implications beyond the states directly involved. The future of prediction markets remains uncertain as some courts view these contracts more like financial instruments than typical sports wagers, while others emphasize the need to uphold consumer protections under state gaming laws.
On the international front, prediction markets face increasing scrutiny as well. For instance, Polymarket was expelled from Portugal amid allegations that insiders profited from political event outcomes. Similar prohibitions have been enacted in France and Ukraine, where concerns range from illegal gambling practices to potential manipulation of market outcomes.
