Massachusetts Fights Robinhood Effort to Block State Gambling Enforcement
Massachusetts has formally opposed Robinhood’s request for a preliminary injunction meant to block the state from enforcing its gambling laws. The state filed a brief asking a federal court to reject Robinhood’s attempt to halt regulatory action against its event-based trading products. The conflict escalates a national debate over whether prediction markets are financial tools or illegal wagers.
State Rejects Federal Preemption Claim
Massachusetts directly challenged Robinhood’s central argument that its event contracts fall under the jurisdiction of the federal Commodity Futures Trading Commission (CFTC). Robinhood claimed that federal law should preempt, or overrule, state gambling regulations.
The state dismissed this federal preemption argument as “smoke and mirrors.” Massachusetts asserted that federal law does not invalidate state authority to regulate gambling and contracts based on sports outcomes. The brief also called Robinhood’s claim of nationwide legalization for its sports-outcome products “unwarranted.” The state cited federal court rulings that support state control over gambling regulation, emphasizing that states can independently define permissible forms of wagering. The state also referenced a similar case in Nevada involving Crypto.com, which was blocked from offering certain sports wagers.
Broader Regulatory Context
The legal action in Massachusetts is one of several parallel battles nationwide. A similar dispute is ongoing in Ohio, where the prediction market platform Kalshi has sued the Ohio Casino Control Commission after the state threatened its business partners. Like Robinhood, Kalshi argues its markets are subject to federal CFTC oversight, a claim Ohio regulators reject.
This regulatory climate in Massachusetts also includes direct enforcement against licensed operators. For instance, the Massachusetts Gaming Commission (MGC) fined DraftKings $450,000 in August 2024 for violating state prohibitions against using credit cards for sports bets. The MGC determined that systemic internal failures led to repeated compliance breaches. This active enforcement demonstrates the state’s resolve to control all forms of wagering within its borders.
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