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The legal fight over sports prediction markets is heating up in Massachusetts. Just days after Attorney General Andrea Joy Campbell targeted Kalshi, another company has gone to court to protect its own operations.
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Robinhood, the popular trading app, is suing to stop Massachusetts from applying state gambling laws to its sports prediction markets. The company said it had “no choice” but to file the case, warning that its customers could lose access to NFL and other sports contracts offered through Kalshi’s platform.
“In light of Massachusetts’s complaint against Kalshi and because Robinhood intermediates its sports-related event contract trades on Kalshi’s exchange, there is a real and imminent threat that Massachusetts will file a similar complaint and motion against Robinhood,” the company wrote in its court filing.
The lawsuit seeks a federal ruling that bars Massachusetts from enforcing what Robinhood calls “preempted law” against its business. Without such protection, Robinhood says it could face civil and even criminal penalties, along with reputational harm.
Attorney General Campbell announced last week that her office had sued Kalshi for illegally offering sports contracts in the state. Kalshi is regulated at the federal level by the Commodity Futures Trading Commission (CFTC), but Massachusetts officials maintain that its contracts function like unlicensed sports betting and should not be available without a state license.
“Sports wagering comes with significant risk of addiction and financial loss and must be strictly regulated to mitigate public health consequences,” Campbell said. “This lawsuit will ensure that if Kalshi wants to be in the sports gaming business in Massachusetts, they must obtain a license and follow our laws.”
At the heart of the dispute is the role of prediction markets, which some see as a form of financial trading, sports trading, and others view as gambling. Robinhood argues that Kalshi’s federal oversight by the CFTC should shield the platform and its partners from state-level gambling enforcement. Massachusetts regulators counter that state law governs how sports betting can operate within its borders, regardless of federal status.
Robinhood stressed that if Massachusetts takes action similar to its case against Kalshi, its users would “abruptly” lose the ability to trade sports-related contracts. For now, the company is asking a federal judge to step in and prevent the Bay State from extending its crackdown.
The clash could set an important precedent for how prediction markets are regulated in states that already allow traditional sports betting. While federal law recognizes Kalshi as a trading exchange, states like Massachusetts may continue to treat such products as betting, demanding licenses and taxes.