Robinhood Fights Back Against Nevada and New Jersey

Robinhood isn’t just about stocks anymore. These days it wants to be an “everything app” for money. Retirement accounts, high-yield savings accounts, and now legal betting disguised as prediction markets.

That’s right, Robinhood wants to take on the top mobile sports betting apps like DraftKings and FanDuel. Though, they’re doing it by offering prediction markets, which for now, aren’t regulated like “normal” sports betting.

Prediction markets are different because instead of betting against the house, you’re basically trading yes-or-no shares like they’re stocks. Cowboys beat the Eagles? Your shares cash out at full value. They lose? They’re worthless. The key difference here is you’re playing against other people in the market, not a bookie setting lines and raking your losses. That’s why Robinhood and its prediction market partner, Kalshi, argue they should be legal on all 50 states.

Regulators in Nevada (and New Jersey) disagree. They feel Robinhood is entering the Las Vegas betting market illegally. Well, Robinhood disagrees and they’re righting back. In late August, Robinhood filed lawsuits in both Nevada and New Jersey. They are arguing that they should be allowed to operate in the states because Kalshi has federal protection to operate legally.

This story has massive — and we mean massive — ramifications across the country, not just in those states. Literally, the entire betting industry is watching this one closely. Keep reading and we’ll explain the dicey situation.

The Robinhood Lawsuits Explained

Here’s the gist of Robinhood’s argument. Kalshi is registered with the Commodity Futures Trading Commission (CFTC) as a designated contract market. That means its event contracts — simple yes/no trades on sports outcomes — are regulated at the federal level. Federal law should trump state gambling laws, Robinhood contends.

Again, Robinhood isn’t operating the prediction market. It’s a facilitator. Think of it as the storefront window that sends customers into Kalshi’s exchange, which actually executes the “trades” or “bets” depending on your perspective. From there, it’s all Kalshi. Robinhood just distributes the outcomes in front of its millions of users. But still, Robinhood stands to gain millions of new revenue (in fees) from the prediction market vertical, which they claim is fully legal.

Robinhood and Kalshi might have a point. So far, federal courts have sided with prediction markets. They are available in 49 states — the lone holdout being Maryland, where a state judge blocked a bid for an injunction from Kalshi. But besides there, prediction markets have won despite state backlash.

Why States Are Pushing Back

Nevada and New Jersey don’t want to give up control of gambling inside their borders. Both states are synonymous with the industry so you can understand why. There are hundreds of million dollars at stake here — as in money that’ll flow to national prediction markets rather than licensed state operators.

That’s why this fight matters so much. It’s not just about Robinhood and Kalshi. It’s about who gets to control the future of sports betting in America. Do states keep calling the shots or does federal law open the door to a completely different type of market that runs nationwide?

Analysts already say the battle could climb all the way to the U.S. Supreme Court — who will make the end-all, be-all decision for all states. For now, Robinhood is betting the lower courts will follow the Kalshi rulings. But it does feel like this case could and should go to the higher courts, but that will take time (well beyond this year).

Football Season Will Open Pandora’s Box

Football season is exactly why this Robinhood fight matters right now. This is the time of year where betting on sports reaches a fever pitch. Just about every state makes its biggest revenues of the year from betting from now til February. That’s the power of NFL and college football betting.

And Robinhood and Kalshi sees the opportunity at hand. That’s why they just rolled out football event contracts — every NFL game, every college matchup, the Heisman race, and more. This isn’t them experimenting. No, this is them going all out on America’s favorite sports.

But here’s the catch: the more eyeballs on these trades, the more pressure regulators are going to feel. The NCAA has already said they’re “deeply concerned” about letting anyone bet on college players outside state systems. State regulators in Nevada and Jersey don’t want to see their control siphoned away either, especially not during football season.

So this season isn’t just about wins and losses on the field. It’s a legal stress test. If Robinhood and Kalshi can survive the fall without courts or regulators pulling the plug, then prediction markets have a real shot at becoming the next frontier of American betting — traditional sportsbooks be damned.

If they can’t? Then this whole thing flames out before the Super Bowl. Either way, football season is about to decide more than just championships — it might decide the future of sports gambling itself. Buckle up, folks, it’s gonna get good!