Robinhood Sues Massachusetts Over Sports Bet Rules

Robinhood Challenges Massachusetts Over Event Contracts

BOSTON, Sept. 15, 2025 — Robinhood Derivatives, LLC has filed a federal lawsuit seeking to prevent Massachusetts regulators from applying state gambling laws to its facilitation of sports-related event contracts. The move follows the state‘s recent legal action against KalshiEx LLC, Robinhood’s trading partner, for allegedly offering sports wagering without a license.

The complaint, lodged in the U.S. District Court for the District of Massachusetts, names Attorney General Andrea Joy Campbell and all five commissioners of the Massachusetts Gaming Commission (MGC) as defendants. Robinhood argues that its operations fall under federal oversight via the Commodity Exchange Act and the Commodity Futures Trading Commission (CFTC), making state-level enforcement a case of state gambling law preemption.

Link to Kalshi Lawsuit

On September 12, 2025, Massachusetts sued Kalshi in Suffolk County Superior Court, claiming the platforms sports-related event contracts amounted to unlicensed sports wagering in violation of state law. The state is seeking monetary damages and a permanent injunction to halt such activity.

Massachusetts‘ complaint specifically referenced Robinhood, alleging that Kalshi’s contracts are also available through the Robinhood platform. The filing claimed that approximately $1 billion in Kalshi wagers were traded via Robinhood in Q2 2025, generating an estimated $10 million in revenue for Kalshi.

Robinhoods Legal Position

Robinhood maintains that while it facilitates the placement and liquidation of event contracts trading for approved customers, all transactions occur on Kalshi‘s federally regulated exchange. The company warns that without court intervention, it faces an “imminent threat” of civil and criminal penalties, reputational damage, and disruption to Massachusetts customers’ access to sports-related event contracts.

The lawsuit seeks a preliminary injunction trading platform order to block the MGC and Attorney General from enforcing state laws that Robinhood contends are preempted by federal regulation.

Broader Regulatory Context

Kalshi has previously secured preliminary relief in other states against similar enforcement attempts, highlighting ongoing tensions between federal derivatives regulation and state-level gaming commission regulatory enforcement. Massachusetts officials, however, argue that sports wagering — whether through traditional sportsbooks or event contracts — must comply with state licensing, taxation, and responsible gambling requirements.

Attorney General Campbell emphasized that “sports wagering comes with significant risk of addiction and financial loss and must be strictly regulated to mitigate public health consequences.”