Robinhood class action alleges event contracts mask illegal sports betting
A class action lawsuit accuses Robinhood of disguising event contracts as regulated investing to dupe consumers into illegal sports gambling. The complaint, reported by Law360 on June 11 and detailed in later filings, alleges Robinhood markets wagers on sporting events through its prediction markets as sophisticated financial trading. Robinhood launched event contracts on October 28, 2024, beginning with the 2024 election cycle. The suit claims these products effectively converted trading into sports betting and violate sports betting statutes. Robinhood charges a $0.01 commission per contract and offers more than 10 event categories for trading.
Robinhood must now defend its event-contract model in court while Kalshi fights parallel state gambling claims in New Mexico, Rhode Island, and Minnesota. Any finding that its contracts violate sports betting statutes would force Robinhood to delist affected markets and rethink its entire prediction-markets product stack.
The Robinhood suit joins a widening state-level assault on federally registered prediction-market platforms that already has Kalshi defending overlapping gambling claims from New Mexico's Torrez and, in other states, federal preemption cases from the CFTC.