Robinhood Files Lawsuit Against Nevada Regulators Over Sports Wagering
A lawsuit has been filed against eight Nevada gaming regulators by Robinhood Derivatives LLC, a company that specializes in trading on prediction markets related to sports outcomes. The filing, submitted on May 7, 2024, in the U.S. District Court in Nevada, seeks an injunction to prevent regulators from disciplining the company for allegedly engaging in unlicensed sports wagering.
The lawsuit mirrors a complaint previously filed by KalshiEx LLC in March, which also challenged the state’s authority over sports betting. Robinhood is asking for a permanent injunction and declaratory relief that would enable it to continue offering positions on sports outcomes via its trading platform. The case will be overseen by District Judge Andrew Gordon, who is also managing the Kalshi matter.
The defendants in the lawsuit include Nevada Gaming Control Board Chairman Mike Dreitzer, board members George Assad and Chandeni Sendall, Nevada Gaming Commission Chairwoman Jennifer Togliatti, and several commissioners, along with Attorney General Aaron Ford. Due to the ongoing litigation, Dreitzer has stated that he and the other defendants will not provide comments at this time.
According to the lawsuit, Robinhood facilitates trades through the Kalshi system. Both companies argue that the yes-or-no propositions regarding sports outcomes provided on the Kalshi website fall under the jurisdiction of the federal Commodity Futures Trading Commission (CFTC). They contend that this federal oversight supersedes state regulations regarding gambling.
In contrast, Nevada and other states maintaining sports wagering operations assert that states have historically held jurisdiction over gaming activities. Some analysts speculate this legal conflict could eventually escalate to the U.S. Supreme Court.
On May 8, 2024, former Control Board Chairman Kirk Hendrick sent a letter to Robinhood indicating that the company’s intention to accept sports wagers by offering event-based contracts in Nevada shows a willful disregard for state law.
In its lawsuit, Robinhood expresses that it had no option but to challenge the state’s regulatory stance. The filing asserts, “Given the board’s refusal to acknowledge what this court has already held — that its threatened enforcement of state law is likely preempted by federal law — Robinhood had no choice but to file this lawsuit to protect its customers and its business.”
Currently, Judge Gordon is expected to take pleadings related to the Kalshi case through late October, with a trial potentially set for December. In addition to the Nevada lawsuit, Robinhood has also initiated a similar legal challenge against gaming regulators in New Jersey this week.
This legal landscape highlights the ongoing tensions between state and federal jurisdictions over sports betting, raising significant questions about the future of such operations in the United States.
