Robinhood earned $173 million from event contracts, driven by sports wagers, but growing state lawsuits are forcing the platform to halt new sports contracts in several states.
Robinhood disclosed that event‑contract revenue jumped to $173 million in the third quarter of 2026, overtaking its crypto trading revenue of $120 million. The surge was largely driven by sports‑betting contracts, a product that has become a core revenue line for the brokerage. However, a wave of state‑level legal actions is compelling Robinhood, Coinbase and other prediction‑market platforms to cease offering new sports contracts in several jurisdictions.
Regulators and attorneys general in Michigan, Ohio and Nevada have deemed sports‑related event contracts as unlicensed gambling, ordering platforms to stop new offerings. Robinhood has already agreed to halt sports contracts in Michigan and Ohio, mirroring a similar decision in Nevada last year. Coinbase announced it will cease sports contracts in Ohio on Nov 13, and Kalshi faces daily fines of up to $500,000 for allowing Michigan residents to trade them. Additional suits are pending in Arkansas, Wisconsin, Kentucky and New York, with the Sixth Circuit recently ruling that federal commodities law does not pre‑empt Ohio’s gambling statutes.
On Nov 5 the Commodity Futures Trading Commission issued an interpretation stating that exchanges may not block customers based on state residency, a rule that becomes effective on Nov 7. The guidance conflicts with existing court orders that require platforms to restrict sports contracts in certain states, leaving firms caught between a federal regulator that wants nationwide access and appellate courts that have sided with state gambling laws.
The outcome of the regulatory clash hinges on several upcoming dates. The CFTC has set a December deadline for firms to comply with its interpretation, while the Supreme Court could consider the pre‑emption issue as early as January. Investors will be watching how much of Robinhood’s and Coinbase’s revenue—estimated at roughly 12% and 4% of total net revenue respectively—remains exposed to these legal battles.
Event contracts are derivatives that let users bet on the outcome of events such as sports games, elections or other occurrences.
The CFTC’s interpretation that exchanges may not block customers by state becomes effective on November 7, 2026.
Platforms offering sports‑related prediction contracts—primarily Robinhood, Coinbase, Kalshi and Polymarket—must stop new sports contracts in the states where courts have ordered restrictions.
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