Poker Writer
A busy week for prediction markets continues as Robinhood has sued the states of New Jersey and Nevada over threats related to event contracts. Elsewhere, sports betting giants DraftKings and FanDuel are among a group of competitors angling to possibly enter the prediction market space.
With Robinhood announcing new prediction markets covering NFL and college football games this week, the stakes are even higher in the fight against state regulators shutting them out. Gaming regulators in Nevada and New Jersey both sent cease and desist letters earlier this year in response to the previous announcement that the platform would launch sports prediction markets.
Robinhood Hopes To Follow In Partner Kalshi’s Footsteps
Robinhood hopes its suit will enjoy the same success as Kalshi’s. Kalshi won preliminary relief against the same two regulators.
Robinhood is partnering with Kalshi for its football offering.
A Maryland court, however, sided with the state in a similar case.
Robinhood’s official complaint against Nevada reads as follows:
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. Robinhood respectfully requests that this Court enjoin Defendants from enforcing preempted Nevada law against Robinhood for its facilitation of transactions involving sports-related event contracts
More broadly, Robinhood expanded on its position that its event contracts are already regulated under the Commodity and Futures Trading Commission (CFTC). Therefore, they argue, they should not be subject to state-specific gambling laws.
If states could regulate some but not all entities relevant to these transactions, such regulation would infringe on the CFTC’s exclusive jurisdiction and fracture what Congress intended to be a uniform set of regulations for commodity futures and swaps trading
FanDuel And DraftKings May Be Next In Predictions Fray
Even if things go well in court for Kalshi and Robinhood, they may soon have high-profile competitors. FanDuel appears set to offer prediction contracts in short order, and DraftKings may not be far behind, among other recognizable names in sports betting and/or fantasy.
Industry observer Dustin Gouker reported on X that FanDuel will enter the prediction space via a partnership with the Chicago Mercantile Exchange (CME). The CME already has a license through the CFTC.
For now, the offering won’t include sports.
Meanwhile, SBCAmericas reported that DraftKings has registered with the National Futures Association. That puts them on track to eventually gain CFTC certification if all goes well.
However, it’s not a clear indicator they plan to launch a predictions product. The last update the company gave simply noted they were watching the space.
Underdog and Prize Picks were also among those identified as applicants to the NFA.
All of these companies will be closely watching further legal machinations regarding prediction markets. Results from the lawsuits by Robinhood and Kalshi may guide the near future of contract trading in the U.S.
Image credit: Nick Youngson/Pix4Free (license)
