Robinhood Derivatives Slams Nevada and New Jersey in High-Stakes Sports Contracts Lawsuit

Robinhood Derivatives just dropped a legal nuke on two state regulators—and the fallout could reshape sports betting contracts nationwide.

Nevada and New Jersey are in the crosshairs as the fintech giant challenges what it calls 'archaic' restrictions on derivative-linked sports contracts. The lawsuit alleges regulatory overreach that stifles innovation and limits investor choice.

The move signals Robinhood's aggressive push into alternative financial products—even as traditional sportsbooks rake in record profits. Because why let states have all the fun when you can derivative-wrap a parlay?

One thing's clear: When a platform known for democratizing finance starts suing regulators, the game's changing faster than a halftime spread.

Just another day in the casino-called-capitalism.

Federal vs. State Conflict

Earlier this year, federal courts signaled that Kalshi had a strong case. Judges noted that federal law governing commodity futures and swaps likely overrides state restrictions on sports wagers. They also agreed that blocking Kalshi WOULD cause serious harm to its business.

But not every court saw it the same way. A federal judge in Maryland recently rejected a similar request, putting that decision at odds with the rulings in Nevada and New Jersey.

“If states could regulate some but not all entities relevant to these transactions, such regulation would infringe on the CFTC’s exclusive jurisdiction and fracture what Congress intended to be a uniform set of regulations for commodity futures and swaps trading,” Robinhood’s complaints said. 

Legal Scuffles Against Robinhood’s Expansion

Robinhood launched its prediction markets hub earlier this year and intermediates trades on Kalshi’s exchange. The suits were filed the same day it launched pro and college football prediction markets.

“Our event contracts, including those for pro and college football, are offered in a compliant, federally regulated way through our CFTC registered Futures Commission Merchant, Robinhood Derivatives,” a spokesperson said. “This is a decisive step forward in our mission to democratize finance for all and unlock even more innovative market opportunities for investors.”

Cravath, Swaine & Moore LLP represents Robinhood. Local counsel includes Pisanelli Bice PLLC in Nevada and Chiesa Shahinian & Giantomasi PC in New Jersey.

This clash between state gaming rules and federal derivatives regulation and its outcome could shape sports-related trading and prediction markets in the U.S. It may also influence future legal challenges for other platforms.

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