Robinhood Has Sued Nevada And New Jersey: Here’s Why

Robinhood sued Nevada and New Jersey regulators over event contract disputes. What does this mean for the future of prediction markets?

Robinhood has taken legal action against regulators in Nevada and New Jersey after both states threatened enforcement over its event contracts. 

The trading platform’s derivatives arm filed these lawsuits this week, claiming that the regulators are ignoring federal court rulings that previously sided with betting platform, Kalshi.

RobinHood Battles New Jersey And Nevada

Robinhood said it started offering event contracts in both states only after federal judges ruled earlier this year that local regulators could not block Kalshi’s similar products.

 Those contracts, which are regulated by the Commodity Futures Trading Commission (CFTC), allow users to bet on outcomes of events such as sports games and elections.

However, according to Robinhood, the regulators’ refusal to acknowledge the rulings creates an uneven playing field. 

In simpler terms, Robinhood is arguing that if Kalshi is allowed to operate in these states without interference, it should receive the same treatment.

Why Robinhood Says Federal Rulings Apply

Robinhood recently pointed out the ongoing dispute with the state regulators in its filings. For context, in March, Kalshi sued both Nevada and New Jersey after they issued cease-and-desist letters over its sports betting operations.

At the end of the lawsuit, Kalshi won, and these regulators were banned from taking enforcement action, even though the cases are still active.

In this case, Robinhood claims that these same protections should extend to its own business. This is because its event contracts also trade through Kalshi’s federally regulated system. 

According to Robinhood’s lawsuit, the company is now asking the court to prevent state regulators from taking any action. Not only this, Robinhood also wants state regulators to be banned from taking any action while the cases are pending.

Nevada and New Jersey Push Back

Robinhood says that it made repeated efforts to reach agreements with these regulators. In New Jersey, for example, Robinhood says that it contacted the Division of Gaming Enforcement. This was to explain why it should be allowed to offer the contracts. 

State officials then reportedly refused to give assurances and did not respond to any follow-up requests for meetings.

The same thing happened in Nevada. Robinhood claims that the Gaming Control Board warned it would view the company’s actions as “willful violations” of state law. This came even after a local federal court sided with Kalshi.

Robinhood says that these regulators also rejected its proposal to temporarily allow offerings similar to those already available on Kalshi.

In sum, Robinhood is claiming that state officials are deliberately overstepping their authority since federal law (and not them) has the final say over these kinds of contracts.

What Robinhood Hopes to Achieve

The lawsuits in Nevada and New Jersey show how Robinhood is trying to secure a foothold in the event contracts market. The company, by seeking restraining orders, is hoping to protect its business and customers while the legal disputes continue.

The case could determine the future of prediction markets in the United States. If federal rulings hold, event contracts may expand more broadly under CFTC oversight.

In all, the company’s aggressive push into event contracts and tokenised stocks shows that it is serious about its strategy to diversify.

The post Robinhood Has Sued Nevada And New Jersey: Here’s Why appeared first on Live Bitcoin News.