In a bold move to safeguard its burgeoning derivatives business, Robinhood has filed a federal lawsuit against Washington’s Attorney General and the state’s Gambling Commission.
The legal action, filed on Monday in the US District Court in Tacoma, seeks to prevent state officials from applying traditional gambling statutes to prediction market trading, arguing that such oversight is strictly a federal matter.
Federal Oversight vs. State Gambling Laws
The conflict ignited after Washington Attorney General Nick Brown brought a case against the prediction platform Kalshi, labeling event contracts as “illegal gambling.” Robinhood’s lawsuit, spearheaded by its Chicago-based arm, Robinhood Derivatives, argues that because the company is registered with the Commodity Futures Trading Commission (CFTC) as a futures commission merchant, its activities are protected under federal commodities law.
A spokesperson for Robinhood emphasized the broader cultural and economic significance of these platforms:
“[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. This step, consistent with our past actions in other jurisdictions, aims to preserve access for customers in Washington.”
The company noted in its filing that it had “no choice but to file this lawsuit to protect its customers and its business” following a December warning from the state Gambling Commission which labeled prediction markets as “unauthorized”.
A Pattern of Legal Resistance
This is not Robinhood’s first attempt to block state-level interference. In September 2025, the company filed a similar suit against Massachusetts Attorney General Andrea Joy Campbell to prevent the state from regulating sports contracts. While that case was initially dismissed as premature, it resurfaced in January 2026 and remains a pending matter as Robinhood continues to seek a preliminary injunction.
With current operations flowing through Kalshi and ForecastEx, and a planned expansion into the Rothera exchange later this year following its 2025 acquisition of MIAXdx, Robinhood is positioning itself as a central pillar of the event contract ecosystem.
The outcome of the Washington case, along with related litigation in New Jersey, will likely define the legal boundary between financial trading and gambling for years to come.
