San Jose lawsuit claims Robinhood turned trading app into secret sportsbook
A San Jose lawsuit claims Robinhood turned its trading app into a secret sportsbook. The suit centers on Robinhood's Prediction Markets Hub, which launched in its app in March 2025 and routes event contracts through KalshiEX, a CFTC-registered exchange. Separately, Benzinga reports that Robinhood has seen explosive growth in prediction markets, with more than 16 billion event contracts traded on its app this year, though it flags a regulation problem facing the business line without specifying the regulatory body or nature of the issue. The lawsuit was filed in San Jose. Both developments emerge as Robinhood's prediction-markets activity scales rapidly through its KalshiEX partnership.
Robinhood must now defend the sportsbook characterization in court while its KalshiEX partnership routes billions of event contracts. An adverse ruling risks forcing a product redesign or termination of the exchange link that powers its fastest-growing business line.