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The Robinhood event contracts lawsuit has escalated into a showdown over state versus federal authority, as the trading platform challenges regulators in Nevada and New Jersey for blocking its entry into the sports event contracts market.
Robinhood argues the states are undermining federal rulings that cleared rival Kalshi, framing the dispute as a test case for innovation, competition, and regulatory power in U.S. financial markets.
“If state regulators are permitted to act against Robinhood but not Kalshi, then Robinhood will lose out in the sports event contracts space,” the company said in its Tuesday complaint.
The Robinhood event contracts lawsuit centers on whether state agencies can regulate prediction markets when the contracts are already under the jurisdiction of the U.S. Commodity Futures Trading Commission (CFTC).
Earlier this year, federal judges sided with Kalshi, ruling that Nevada and New Jersey could not enforce bans against its federally regulated contracts. However, Robinhood alleges regulators have ignored those rulings and continued threatening enforcement.
“This lawsuit highlights an important tension between state-level gambling oversight and federal commodities regulation,” said Chris Brummer, a Georgetown law professor who specializes in financial regulation, in comments reported by CoinDesk.
In New Jersey, Robinhood claims it reached out to the Division of Gaming Enforcement following the Kalshi ruling to confirm it could operate legally. According to the complaint, officials refused to commit and ignored multiple follow-up requests.
A similar conflict unfolded in Nevada, where Robinhood says the state’s Gaming Control Board warned that offering event contracts would be treated as “willful violations” of state law, despite a federal court siding with Kalshi earlier this year.
Robinhood is now asking courts to bar regulators from interfering and seeking temporary restraining orders to protect its business while the lawsuits proceed.
The Robinhood event contracts lawsuit is closely tied to Kalshi’s own legal victories. Kalshi, a CFTC-regulated prediction market, sued Nevada and New Jersey after receiving cease-and-desist letters blocking its event contracts.
Federal courts sided with Kalshi, ruling that state gambling regulators lacked authority over federally regulated financial products.
Still, both cases remain active — leaving Robinhood in a precarious position. “Robinhood is effectively demanding equal treatment under the law,” said Joe Lubin, founder of Ethereum incubator ConsenSys, in a Bloomberg interview. “If Kalshi can operate, then Robinhood argues it must be allowed the same access.”
While the U.S. legal battle intensifies, Robinhood is also under fire in Europe. The Bank of Lithuania has opened an investigation into the company’s tokenized stock products tied to private firms like OpenAI and SpaceX.
Launched on June 30, the blockchain-based “Stock Tokens” allow EU traders to track prices of private companies via Ethereum’s Arbitrum network.
But controversy erupted when OpenAI publicly denied any affiliation, warning investors of “misleading claims.” Elon Musk added fuel by calling the tokens “fake equity.”
Robinhood clarified that the tokens are synthetic derivatives, not actual shares — but the EU probe underscores the mounting regulatory heat surrounding its operations.
The Robinhood event contracts lawsuit is more than just a legal skirmish. At stake is the future of U.S. prediction markets — and whether state or federal authorities hold ultimate power.
If Robinhood prevails, it could pave the way for broader adoption of event contracts across multiple states, opening up new financial instruments for retail investors. If regulators succeed, the industry may face years of uncertainty and fragmented oversight.
“This fight isn’t just about Robinhood,” said Sheila Warren, CEO of the Crypto Council for Innovation, in remarks to Reuters.
“It’s about the future of prediction markets and whether innovation will be embraced or suffocated by outdated regulatory turf wars.”
The Robinhood event contracts lawsuit has quickly become a flashpoint in the clash between state regulators and federal oversight.
With temporary restraining orders pending and pressure mounting in both the U.S. and EU, Robinhood’s legal gambit could reshape the competitive landscape of event contracts — and redefine how financial innovation is regulated.
For now, all eyes are on the courts to decide whether Robinhood will gain equal footing with Kalshi, or face prolonged battles that could stall its ambitions in the sports event contracts space.
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