Robinhood sues Massachusetts to block gambling laws from applying to prediction markets

Robinhood has filed a federal lawsuit against the Massachusetts attorney general and the state’s gaming commission, seeking to prevent them from applying state gambling laws to prediction markets offered through Kalshi.

The suit, lodged this week in U.S. District Court in Boston, comes days after Attorney General Andrea Campbell filed a case in Suffolk Superior Court against Kalshi, alleging the company was promoting unlicensed online sports betting.

“Sports wagering comes with significant risk of addiction and financial loss and must be strictly regulated to mitigate public health consequences,” Campbell said in a statement. “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. I am grateful for the ongoing partnership with the Gaming Commission.”

Robinhood began offering Kalshi’s football prediction markets this season. The trading platform argues that state gambling laws do not apply because Kalshi is regulated by the U.S. Commodity Futures Trading Commission (CFTC) and that state intervention would violate the Commodity Exchange Act.

“While Robinhood customers are placing orders for event contract trades in their Robinhood accounts, the trades themselves are taking place on Kalshi’s CFTC-designated exchange,” the company said in its filing. It added that potential enforcement could cause “irreparable harm” to its business.

The Massachusetts case adds to a broader legal battle across the United States over whether prediction markets constitute sports betting. Both Robinhood and Kalshi are facing litigation in Maryland, New Jersey, and California, while Kalshi has previously won injunctions blocking state enforcement in New Jersey and Nevada.