Robinhood sues Massachusetts Gaming Commission and AG
Robinhood has filed a lawsuit in the US District Court of Massachusetts against the Massachusetts Gaming Commission and Attorney General Andrea Joy Campbell. The dispute concerns whether Robinhood and its partner, KalshiEX, are permitted to offer event contracts, which state regulators classify as a form of sports betting. The company is seeking an injunction to prevent state authorities from restricting its operations.
Reason for the dispute
The disagreement centres on the classification of event contracts, financial instruments that allow users to trade on the outcome of future events. Massachusetts regulators view these contracts as a form of sports betting, whereas Robinhood considers them regulated trading products, distinct from gambling.
In August 2025, Robinhood partnered with KalshiEX, a contract market designated by the Commodity Futures Trading Commission (CFTC). KalshiEX operates the exchange where trades are executed, while Robinhood functions as a futures commission merchant, enabling users to place and settle orders through its platform. Robinhood states that it does not manage the exchange but serves as a point of access for customers.
Massachusetts’ legal position
On 12 September 2025, Attorney General Andrea Joy Campbell and the Massachusetts Gaming Commission filed a lawsuit against Kalshi, alleging unlawful sports betting. To address public health concerns, Campbell stated that all forms of betting on sporting events should be strictly regulated due to the risks of addiction and financial harm.
Campbell said, “Sports wagering comes with significant risk of addiction and financial loss and must be strictly regulated to mitigate public health consequences. 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’s legal response
Robinhood responded by filing its own lawsuit, seeking an injunction to prevent Massachusetts from regulating its event contracts. The company also requested a legal declaration that such state action violates the Supremacy Clause of the US Constitution. Robinhood stated that it initiated legal proceedings due to concerns that regulators might extend enforcement to its operations following its partnership with Kalshi.
“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; it merely adds additional CFTC regulation of Robinhood’s activities as an FCM,” the company stated in its filing.
A Robinhood spokesperson told SiGMA News, “We believe in the power of prediction markets and the important role they play at the intersection of trading, news, economics, politics, culture, and sports. Every eligible customer should have access to these markets, which are federally regulated through our CFTC-registered Futures Commission Merchant. This step, consistent with our past actions in other jurisdictions, aims to preserve access for those in Massachusetts.”
Legal basis of the case
The dispute centres on two key legal principles: the Commodity Exchange Act (CEA), which governs futures and event contracts under federal oversight by the CFTC, and the Supremacy Clause of the US Constitution, which limits state interference with federal law. Robinhood argues that Massachusetts is overstepping its authority by attempting to regulate event contracts, an area already covered by federal legislation.
Impact on Robinhood customers
Robinhood provides access to Kalshi’s exchange for 31,000 users in Massachusetts. If state regulators impose restrictions, these users may lose access to event contracts. Robinhood could also face civil, criminal, and reputational consequences. The company maintains that it operates as a brokerage platform, facilitating access to a federally regulated market.
In August 2025, Representative David Muradian introduced HB 4431, a bill aimed at prohibiting online games or contests that simulate gambling. The legislation specifically targets dual-currency systems, commonly used in social casino platforms, reflecting a broader effort to restrict gambling-like activities.
CFTC regulation and jurisdiction
Kalshi operates under regulations set by the CFTC, and Robinhood, as a futures commission merchant, is also subject to federal oversight. Robinhood argues that Massachusetts lacks jurisdiction because trades occur on Kalshi’s exchange and both entities are already regulated by the CFTC. The company views the state’s involvement as unnecessary duplication and a potential violation of federal authority.
Massachusetts is not the only state examining Robinhood and Kalshi’s activities. Legal proceedings are also underway in New Jersey, Nevada, and California. Additionally, Massachusetts Secretary of State Bill Galvin issued a subpoena to Robinhood earlier in the year. Legal scrutiny surrounding event contracts is expanding across multiple jurisdictions.
