Meta description: Robinhood must stop new Michigan sports event contracts by September 9 and close remaining positions by October 9 under a federal court deal.
Tags: Robinhood, Kalshi, Michigan Gaming Control Board, CFTC, Sixth Circuit, Polymarket
Market platform: none-if-cross-platform
Category: Regulation
Robinhood Derivatives, LLC agreed to stop offering new sports-related event contracts to Michigan customers by the end of September 9, 2026, and close remaining covered positions by October 9, 2026, under a stipulation approved by U.S. District Judge Paul L. Maloney on September 4.
The agreement keeps the core legal dispute alive: whether the Commodity Exchange Act preempts state gambling laws when sports-event contracts trade on federally regulated designated contract markets. Michigan officials agreed not to enforce state gaming laws against Robinhood over the covered contracts while the company complies with the order. Robinhood did not concede that Michigan can regulate the contracts as sports betting.
The stipulation narrows Robinhood’s Michigan activity while related appeals proceed in the U.S. Court of Appeals for the Sixth Circuit. It also ties the pause to the separate Michigan state-court injunction against KalshiEX LLC, one of the main tests of state enforcement against sports prediction markets.
What did Robinhood agree to in Michigan?
Two dates control the federal order. By the end of September 9, Robinhood had to stop offering new sports-related event contracts to Michigan customers on any designated contract market, including markets operated by KalshiEX LLC and Rothera Exchange and Clearing LLC. By the end of October 9, it must close out any open sports-related event contracts held by Michigan customers that were opened on or before September 9 and not voluntarily closed.
In exchange, Michigan defendants, including Attorney General Dana Nessel and Michigan Gaming Control Board Executive Director Henry Williams in their official capacities, agreed to forbear from enforcement actions against Robinhood over the covered sports-related event contracts as long as Robinhood remains in compliance.
The pause ends at the first of two triggers: final resolution of the specified Sixth Circuit appeals, including any U.S. Supreme Court review if sought, or dissolution of the Michigan state-court preliminary injunction against Kalshi. That structure keeps Robinhood out of new Michigan sports contracts for now without resolving the preemption dispute.
The Michigan Gaming Control Board said Robinhood agreed to stop new Michigan sports contracts by September 9 and close remaining positions by October 9. The federal stipulation and order supply the operative terms.
Why does the Kalshi injunction matter?
Michigan had already obtained a state-court preliminary injunction against Kalshi before the Robinhood stipulation took effect. On September 1, 2026, Ingham County Circuit Judge Rosemarie E. Aquilina barred Kalshi from offering sports-event contracts to people located in Michigan, according to the order described by Nessel’s office.
The Kalshi order requires geolocation controls through a provider licensed by the Michigan Gaming Control Board and carries potential penalties of $500,000 per day for violations, according to Michigan filings and contemporaneous legal reporting. Nessel’s office has argued that Kalshi’s sports-event contracts violate Michigan’s Lawful Sports Betting Act.
Kalshi disputes that theory. Like Robinhood, it has argued that sports-event contracts listed on CFTC-regulated exchanges fall under federal commodities law, not state sports-betting regimes. The Michigan injunction does not decide that federal preemption question for the whole industry, but it gives the state an enforceable order against one of the sector’s central exchanges while appellate litigation continues.
That distinction matters for operators and regulators. Kalshi is operating under a state-court injunction in Michigan. Robinhood is operating under a federal-court stipulation that limits its Michigan sports-contract activity while preserving its legal position.
What is the federal legal question?
The dispute turns on the boundary between the Commodity Futures Trading Commission’s authority over designated contract markets and the states’ traditional authority over gambling. Prediction-market operators argue that event contracts listed on CFTC-regulated markets are federally supervised derivatives. State gaming regulators argue that sports contracts offered to local users can still be regulated as illegal or unlicensed sports betting.
Judge Maloney denied preliminary-injunction requests from Robinhood and QCX, LLC, dba Polymarket US, in June 2026, according to federal docket entries in the Western District of Michigan. Robinhood appealed to the Sixth Circuit. Polymarket also appealed in related litigation. Those Michigan appeals are moving alongside, but are not identical to, other Sixth Circuit disputes involving Coinbase and Kalshi.
Maloney’s June ruling rejected the request to block Michigan enforcement at the preliminary stage. In addressing the preemption argument, he wrote that there was “no clear statement that Congress intended to supersede the states’ traditional role in regulating gambling.” That language goes to the heart of the case: whether Congress clearly displaced state betting laws when it gave the CFTC authority over listed event contracts.
The Commodity Exchange Act also gives the CFTC a public-interest review role over certain event contracts, including contracts involving gaming. The industry fight is over what follows after a contract is listed on a CFTC-regulated market. Operators say federal regulation occupies the field for those products. States say federal exchange status does not convert sports wagers into instruments immune from gaming law.
How broad is the appellate fight?
The Michigan cases sit inside a national split over sports prediction markets. In a New Jersey case, the Third Circuit sided with Kalshi’s federal preemption position. In a Nevada case, the Ninth Circuit sided with state regulators and rejected a federal shield for the disputed sports contracts. In the New Jersey dispute, Flaherty v. KalshiEX, LLC, a Supreme Court docket was opened as No. 26-299.
The Sixth Circuit is now considering several related but procedurally distinct disputes. Robinhood’s Michigan appeal is paired with Polymarket’s Michigan appeal. Coinbase has a separate Sixth Circuit appeal. Kalshi also has consolidated Sixth Circuit appeals arising from Ohio and Tennessee litigation. Those cases involve the same regulatory fault line, but the court’s procedural posture differs by party and state.
For prediction-market operators, the practical stakes are immediate. A favorable preemption ruling could strengthen their ability to offer sports contracts nationally through federally regulated markets. An unfavorable ruling could leave them exposed to state-by-state licensing demands, geolocation obligations, enforcement actions and fines.
For states, the issue is equally concrete. Michigan, Nevada, New Jersey, Maryland, Massachusetts and other jurisdictions have treated sports-event contracts as a challenge to their regulated sports-betting systems. State regulators say unlicensed event-contract offerings can bypass consumer-protection rules, tax structures and responsible-gaming requirements that apply to sportsbooks.
What happens next?
The immediate Michigan milestones are set: no new Robinhood sports-related event contracts for Michigan customers after September 9, and remaining covered Michigan positions closed by October 9. The state has agreed to hold off enforcement against Robinhood while the company follows those terms.
The next legal milestones are in the Sixth Circuit and, potentially, the U.S. Supreme Court. The Sixth Circuit proceedings involving Robinhood, Polymarket, Coinbase and Kalshi will shape how much room state regulators have to enforce gambling laws against CFTC-regulated sports-event contracts in Michigan and nearby states. The split between the Third and Ninth Circuits increases the chance that the issue reaches the Supreme Court.
Until then, Robinhood’s Michigan customers are out of new sports-event contracts on the platform, Kalshi remains bound by the Ingham County injunction, and the prediction-market industry faces the same unresolved question across multiple courts: whether sports contracts are federally regulated derivatives, state-regulated betting products, or both.
