Robinhood Sues Washington After Kalshi Case Lands in Court

Washington sued Kalshi in state court, and Robinhood answered with a federal case of its own just days later. The new filing adds another layer to the growing legal clash over prediction markets, where state regulators argue the products look like gambling while operators say federal law controls the field.

Good to Know

• Robinhood sued Washington in federal court after the state sued Kalshi in state court.
• Robinhood said Washington poses a “concrete and imminent threat” of enforcement.
• The legal pattern looks similar to what already played out in Massachusetts.

Robinhood Tries to Get Ahead of Washington

Robinhood filed its case in the U.S. District Court for the Western District of Washington at Tacoma. In the complaint, the company said “there is a concrete and imminent threat that Washington will file an enforcement action against Robinhood as it did against Kalshi.”

That filing did not come out of nowhere. Robinhood partnered with Kalshi last year, which gave the brokerage a path to offer prediction market event contracts through that relationship. So once Washington went after Kalshi on Friday, Robinhood had clear reason to think it could be next if the state won or widened the fight.

Robinhood asked the court for an injunction and said, “prevent further harm to Robinhood, the Court should enjoin Defendants from enforcing preempted Washington law against Robinhood in contravention of the United States Constitution.”

Prediction markets keep landing in court because they sit in a gray area that regulators and operators view very differently. The contracts can look a lot like sports bets or other gambling products. State officials see that overlap and try to apply state gambling laws. Operators take the opposite view and argue that federal oversight, not state law, controls those markets.

A Familiar Legal Pattern Is Taking Shape

Washington is not the first place where the sequence has looked like this. The current fight tracks closely with what happened in Massachusetts. There, Attorney General Andrea Joy Campbell sued Kalshi in state court in September over what the state described as illegal sports betting. Days later, Robinhood sued Massachusetts in federal court.

That repeat pattern says a lot about where the industry is heading. More than a dozen state and tribal regulators are already in legal fights with prediction market operators, and the same core question keeps coming back. Can states use gambling law to police these contracts, or does federal law block that effort?