Robinhood is suing the state of WA to block the use of gambling laws against prediction markets – GeekWire
Robinhood is not awaiting trial in Washington state.
The financial services company has filed a lawsuit against Washington’s attorney general and the gambling commission, arguing that the state cannot use its gambling laws to block speculative trading against which the market is authorized under federal commodities law.
The lawsuit comes days after Washington Attorney General Nick Brown sued the market prediction platform Kalshi in state court. The state takes the position that event contracts — which allow users to bet on the outcome of real-world events from NFL games to elections to the amount of measles in a given year — amount to illegal gambling.
In its lawsuit, filed March 30 in US District Court in Tacoma, Wash., Robinhood argues that federal law preempts Washington’s gambling regulations as applied to event contracts traded on exchanges regulated by the Commodity Futures Trading Commission.
Robinhood Markets, based in Menlo Park, Calif., is known for promoting free stock trading. The lawsuit was filed by its Chicago-based subsidiary, Robinhood Derivatives.
The company, which is registered with the CFTC as a futures commission broker, offers event contracts on the Kalshi and ForecastEx exchanges and says it plans to begin trading on a third exchange, Rothera, later this year, according to the complaint.
Previous moves: The company points to Kalshi’s suit and a December warning from the state Gambling Commission declaring the betting markets “unauthorized” as evidence that enforcement of the company is imminent.
The complaint was filed on behalf of Robinhood by the law firms Davis Wright Tremaine in Seattle and Cravath, Swaine & Moore in New York.
Robinhood’s lawsuit cites Brown’s statement, in a press conference last week, that Kalshi is “just a bookie with a good name, and a lot of money behind them.”
The lawsuit says the company “had no choice but to file this lawsuit to protect its customers and its business.”
“[W]I believe in the power of prediction markets and the important role they play at the intersection of business, news, economics, politics, culture and sports,” said a Robinhood spokesperson via email, noting that the markets are regulated by the government.
GeekWire has reached out to the Washington AG’s office for comment.
Broad landscape: The case is part of a nationwide wave of lawsuits over prediction markets. Kalshi is facing more than 20 charges, and the Arizona AG filed criminal charges last month.
Courts are divided on this issue. Federal judges in New Jersey and Tennessee, for example, have ruled that states cannot enforce their gambling laws against state-regulated betting markets, while state courts in Massachusetts and Ohio have ruled that they cannot.
Washington state has taken a broader position than other states in the fight, saying all event contracts — not just sports betting — are illegal under state law. Some states are focusing their efforts on sports-related contracts specifically. A bipartisan bill introduced last week by Sens. Adam Schiff (D-Calif.) and John Curtis (R-Utah) would ban sports betting on prediction markets.
Read the full complaint below.
Robinhood v. WA state by GeekWire
