Robinhood to Stop Offering Sports Prediction Markets in Michigan

By the end of Wednesday, Robinhood will cease offering sports event contracts on its prediction market platform. This came after a court-approved agreement between Robinhood and state regulators. This followed Michigan Attorney General Dana Nessel's preliminary injunction against Kalshi, which forces it to stop offering the same types of contracts or face a $500,000-per-day fine. 

This agreement, though, doesn't settle whether Michigan can legally regulate prediction markets registered with the Commodity Futures Trading Commission. 

For now, Robinhood is pausing these contracts. 

Robinhood Agrees to Pause Sports Contracts in Michigan

U.S. District Judge Paul L. Maloney ordered Robinhood to cease offering sports-related contracts last week. This agreement specifically targets contracts offered through two exchanges: KalshiEX and Rothera Exchange and Clearing. For outstanding positions in these markets, Robinhood must close them by the end of the day on October 9 unless a customer closes them on their own. 

In cooperation, Michigan won't bring any enforcement action against Robinhood over these contracts as long as it complies. 

Rather than one side winning or losing, this is more of a "pause." In March, Robinhood filed a suit against Nessel and the Michigan Gaming Control Board. On June 17, a Western District of Michigan judge denied Robinhood's preliminary injunction, which Robinhood appealed. 

Sixth Circuit Appeal Could Determine Next Steps

That appeal has since been attached to an appeal from Polymarket US, and Coinbase also has a separate suit, all in the Sixth Circuit. Additionally, the Sixth Circuit may consolidate other appeals, including Kalshi's Ohio and Tennessee cases. 

Following the ruling in Kalshi, Michigan's Department of the Attorney General asked Robinhood to stop. Robinhood needed time to notify customers, but it led to the agreement we have now. So, two prediction market platforms have agreed to a geofence despite no formal ruling on whether Michigan can regulate these platforms and "overrule" the CFTC. 

This agreement will stay in place until the Sixth Circuit rules and the preliminary injunction against Kalshi dissolves. So, this could go on for a while. 

On top of all this, New Jersey has petitioned the Supreme Court for a ruling on prediction market platforms.