Robinhood sued the Massachusetts attorney general and the Massachusetts Gaming Commission on Monday.
The filing came on the heels of Massachusetts’ lawsuit against Kalshi on Friday, in which the state AG accused the CFTC-regulated platform of offering illegal sports wagering under the guise of event contracts.
BREAKING: Robinhood has filed a lawsuit in Mass. federal court against the @MassAGO and @MassGamingComm to block the two state agencies “from enforcing preempted Massachusetts law against Robinhood for its facilitation of transactions involving sports-related event contracts.” pic.twitter.com/l0m1SFekqm
— Daniel Wallach (@WALLACHLEGAL) September 15, 2025
Robinhood states in its brief that it “had no choice but to file this lawsuit to protect its customers and its business.” Massachusetts ordering Robinhood to stop offering sports contracts would interfere with the impartial access that federal exchanges must allow on their platforms. Robinhood also raised concerns about reputational damage and lost revenue from being unable to offer Kalshi’s sports contracts in Massachusetts.
State or federal court remains a key question in new MA cases
One of the unique features of the case filed against Kalshi is that the case is being held in a state court instead of a federal court. Kalshi can have the case removed to federal court if it can prove “complete preemption,” a high legal standard that requires an exclusive federal remedy to a state-law issue.
Robinhood is going on the offensive in Massachusetts by making many of the same federal preemption arguments that Kalshi has put forth. However, Robinhood has also made new arguments about obtaining a sports betting license. The brief reads in part:
“Even if sports-related event contract trading were sports wagering—and it is not—and even if Robinhood could seek and be granted a Massachusetts sports-wagering license, which is by no means a certainty due to the discretionary nature of the review process…it would be entirely impracticable for Robinhood to be subject to the often conflicting regulations of each of the states in which it makes federally authorized event contract trading available to its customers.”
For example, some states prohibit wagers on college athletes while others allow those types of prop bets. Contrasting restrictions on college games could be a source of conflict for sports contracts on college matches.
This is not the first time Robinhood has tangled with Massachusetts, either.
Robinhood and MA tangled over gamification of investing
In 2021, Massachusetts sued Robinhood for the gamification elements of its app. The complaint alleged that Robinhood used game-like tactics in its user interface to entice traders to make trades they didn’t understand. Regulators took issue with features like in-app confetti after a customer’s first stock trade. The complaint also alleged data security failures.
Robinhood settled that lawsuit for $7.5 million in 2024, but it has not changed its mission to simplify finance and make it more accessible to ordinary traders. Gambling regulators have noticed the double-edged sword of that mission. This latest lawsuit spotlights the ongoing debate about what responsibility accessible retail investing platforms have when engaging a broad base of inexperienced or speculative users.
