Massachusetts Challenges Robinhood in Ongoing Legal Dispute

Massachusetts has filed a legal brief against the prediction market platform Robinhood, marking the latest development in a long-running dispute. 

The brief opposes Robinhood's attempt to block the enforcement of state laws governing its trading in sports-related event contracts. The move also comes as part of an intensifying legal push by state regulators to curtail what they describe as unlicensed sports betting activities.

Robinhood had previously requested a preliminary injunction against the state, arguing that federal law preempts state regulations and that sports betting has been effectively legalized nationwide. The company sought to prevent Massachusetts from enforcing laws that it claims conflict with federal financial regulations covering swaps and derivatives.

In its response, Massachusetts strongly disputed Robinhood’s interpretation. The state cited two recent federal court decisions, including one involving Crypto.com in Nevada, where the platform was barred from offering sports betting services.

The filing also emphasized that states retain the authority to regulate gambling, regardless of federal developments like the 2010 expansion of the Commodity Exchange Act. 

The legal challenge is being closely watched as Massachusetts prepares for a similar case involving Kalshi, a prediction market company that has been working with regulators to develop sports-related contracts. State officials say these platforms often operate in legally gray areas and could be breaking gambling laws.

Robinhood plans expansion

Despite mounting legal pressures, Robinhood announced this week that it remains committed to expanding its presence in the growing prediction markets industry.

Robinhood’s Vice President and General Manager of Futures and International, JB Mackenzie, said the company is open to acquisitions if the right opportunities arise, saying they would look to see if there is an acquisition that is available. 

Prediction markets, which allow users to place event-based contracts on outcomes ranging from political elections to sports tournaments, have attracted increased attention globally. Robinhood entered the sector this year by partnering with Kalshi. It also works with Interactive Brokers Group’s ForecastEx platform.

Robinhood has seen its stock value rise sharply in 2025, accounting for as much as 35% of daily Kalshi trading volume, and its event contracts could generate over $200 million annually.

As interest in the asset class grows, so too does competition. Underdog has launched its own prediction contracts, while Intercontinental Exchange recently announced a $2 billion investment in rival Polymarket. 

Robinhood, meanwhile, says it may pursue further partnerships or joint ventures in addition to acquisitions.