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Robinhood has gone on the offensive, filing a federal lawsuit against Washington’s attorney general and gambling commission to stop the state from applying gambling laws to prediction market trading.
The move comes just days after Washington Attorney General Nick Brown brought a case against prediction market platform Kalshi in state court. Washington’s position is that event contracts amount to illegal gambling and should be banned.
Robinhood’s suit is designed to block similar enforcement against its own prediction market business.
New lawsuit, same federal oversight argument
Robinhood’s case, filed on Monday (Mar 30) in the US District Court in Tacoma, relies heavily on the claim that federal law overrides Washington’s gambling statutes when it comes to event contracts.
The company points out that its trading activity is regulated by the Commodity Futures Trading Commission, and therefore should not be treated as gambling under state law.
The suit was brought by Robinhood Derivatives, its Chicago‑based arm, though the parent company is headquartered in Menlo Park, California. Robinhood is registered with the CFTC as a futures commission merchant and currently offers event contracts through Kalshi and ForecastEx, with plans to expand to a third exchange, Rothera, later this year, following its 2025 purchase of MIAXdx.
The filing also makes clear that Robinhood acted before enforcement reached its doorstep. The company cited Washington’s lawsuit against Kalshi and a December warning from the state Gambling Commission labeling prediction markets “unauthorized” as proof that action against its own business was imminent.
In its complaint, Robinhood said it had “no choice but to file this lawsuit to protect its customers and its business.”
“[W]e believe in the power of prediction markets and the important role they play at the intersection of trading, news, economics, politics, culture, and sports,” a Robinhood spokesperson said via an email to Geek Wire. “This step, consistent with our past actions in other jurisdictions, aims to preserve access for customers in Washington.”
Law firms Davis Wright Tremaine in Seattle and Cravath, Swaine & Moore in New York are representing Robinhood.
Robinhood try again
This is not the first time Robinhood will be testing this legal move. Back in September 2025, just three days after Massachusetts Attorney General Andrea Joy Campbell filed suit against Kalshi for alleged illegal gambling, Robinhood responded with its own case against Campbell and the Massachusetts Gaming Commission.
The company also asked a federal court to block the state from regulating its role in offering sports contracts, arguing that such oversight would clash with federal commodities law.
A judge initially dismissed the case as premature, but the dispute resurfaced in January 2026 after Robinhood expanded to its second exchange. Since then, the company has sought a preliminary injunction to prevent Massachusetts from applying gambling laws to its operations, and the matter is still pending.
At the same time, a related case is playing out in New Jersey, where Robinhood’s position is closely tied to ongoing litigation involving Kalshi. The KalshiEx LLC v. Flaherty case is expected to play a key role in the prediction market sector, with even the CFTC involved.
