Prediction markets operators are taking a lot of heat currently. Regulators argue that they are offering illegal betting, while they insist that they aren’t breaking any laws because of the nature of their offering. Now, Robinhood is taking the fight back to the regulators.
The prediction market operator has filed lawsuits against the states of Nevada and New Jersey. Robinhood’s legal action is based on the argument that the company is not offering gambling products, and so the state regulators should not be allowed to prevent it from doing business.
aiming to prevent the regulators from imposing gambling-related laws
Robinhood is aiming to prevent the regulators from imposing gambling-related laws which it claims do not apply. The operator has supposedly been prevented from distributing its sports-related events markets in both states.
In its lawsuits, Robinhood makes the point that it is regulated by the Commodity and Future Trading Commission, meaning gambling regulators should have no power to ban it. If regulators bypass this oversight, Robinhood said it would “fracture what Congress intended to be a uniform set of regulations for commodity futures and swaps trading.” The company described the legal action as “a decisive step forward” in the battle with gaming regulators.
Notably, Robinhood’s sports-related contracts are traded via the KalshiEX LLC derivatives platform. Kalshi is another prediction market operator facing the heat. In June, a coalition of 36 attorney generals came together to argue that Kalshi was offering “disguised sports bet.” In total, opponents to Kalshi filed five amicus briefs against the firm.
It is yet to be seen whether the prediction market will be able to stand up to its mounting opposition. However, even major betting giant FanDuel has seen the lucrative opportunity in the offering, meeting with Kalshi in June to discuss a partnership. The Nevada gaming regulator this week warned FanDuel not to proceed with such a partnership.
