Massachusetts' Attorney General faced legal action by Robinhood, a well-known financial services company, inaugurating a lawsuit against the state's top legal official.
Robinhood Files Lawsuit Against Massachusetts Authorities Over Sports Event Contracts
In a move aimed at challenging the regulatory authority of the Massachusetts Attorney General and the Massachusetts Gaming Commission, financial services company Robinhood has filed a lawsuit in Suffolk Superior Court. The lawsuit seeks a court injunction to prevent the enforcement of state law regarding sports-related event contracts.
At the heart of the dispute is Robinhood's partnership with Kalshi, a company offering sports event contracts. The Attorney General's Office has alleged that Kalshi has neither applied for nor received a Massachusetts sports betting license, as required by law.
Robinhood, however, argues that Massachusetts law is preempted by the Commodity Exchange Act. The company trades on a Commodity Futures Trading Commission-designated contract market, and it believes that the Act has exclusive jurisdiction over transactions involving event contracts, thus preempting state regulation.
The lawsuit is a response to a previous lawsuit filed by the Attorney General, Joy Campbell, against Kalshi for offering sports event contracts in Massachusetts without a required sports betting license from the Massachusetts Gaming Commission.
Campbell, in a statement, expressed gratitude for the ongoing partnership with the Massachusetts Gaming Commission and stated that the lawsuit will ensure that if Kalshi wants to be in the sports gaming business in Massachusetts, they must obtain a license and follow the state's laws.
The Attorney General believes that sports event contracts are nothing more than unlicensed sports betting and should be strictly regulated due to the potential for addiction and financial loss. This stance is shared by five other US states - New Jersey, New York, Illinois, Pennsylvania, and Nevada - where Kalshi has filed lawsuits against the respective gambling authorities in response to cease-and-desist orders.
Nicholas J. Schneider, counsel for Robinhood, stated that there is a real and imminent threat that Massachusetts will file a similar complaint and motion against Robinhood.
This development marks a significant escalation in the ongoing debate about the regulation of sports event contracts, a relatively new and rapidly growing market. As the case progresses, it will likely set a precedent for how these contracts are regulated in the future.
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