The derivatives arm of trading platform Robinhood has sued regulators in Nevada and New Jersey in a bid to head off any potential enforcement action from the states over its sports event contracts.
In a pair of complaints on Tuesday against Nevada and New Jersey gaming regulators and their attorneys general, Robinhood Derivatives said it started offering the event contracts in the states after federal courts earlier this year allowed prediction market Kalshi to offer the contracts.
Robinhood claimed in separate lawsuits that after those rulings, Nevada and New Jersey continued trying to stop the company from offering the contracts even though the courts stopped it “from doing so against Kalshi with respect to the same transactions.”
Kalshi sued Nevada and New Jersey gaming regulators in March, claiming cease-and-desist letters from the states over offering its sports betting contracts are moot as it is regulated by the Commodity Futures Trading Commission.
Federal courts in both states sided with Kalshi and stopped the regulators from taking enforcement action against the company. Both lawsuits are still ongoing.
Robinhood claims harm if not allowed to offer contracts
Robinhood claimed that if the state regulators are permitted to take action against it but not Kalshi, then it’ll lose out to the platform in the sports event contracts space.
Event contracts let users bet on the outcome of events such as sports games or election outcomes, and have their roots in using blockchains for transparency and dealing with resolving the truth of the contract.
Robinhood said its platform facilitates the placement and liquidation of event contracts for its users, which trade on Kalshi.
It said that given each state’s “refusal to acknowledge what this Court has already held — that its threatened enforcement of state law is likely preempted by federal law — Robinhood had no choice but to file this lawsuit to protect its customers and its business.”
Regulators declined Robinhood’s arguments
Robinhood claimed in its lawsuits that the gaming regulators from both states denied its assertions that it should be allowed to offer event contracts after the courts sided with Kalshi.
It said in its New Jersey suit that it contacted the state’s Division of Gaming Enforcement to explain that it should be allowed to…
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