Robinhood Pulls Sports Event Contracts From Michigan Pending the Sixth Circuit

The company says it does not believe the contracts break state law, and it has stopped offering them in Michigan anyway. In exchange the state has agreed not to enforce its sports betting laws against Robinhood while the appeals run. Its broader prediction markets hub stays open.

• Robinhood has agreed to stop Michigan customers from entering new sports-related event contract positions, at least until the US Court of Appeals for the Sixth Circuit rules
• The appeals before that court involve Robinhood, Coinbase and Kalshi, and the agreement also turns on the state court case against Kalshi
• Michigan officials agreed not to enforce state sports betting laws against Robinhood while it complies
• Robinhood will continue to offer access to its broader prediction markets hub in the state
• It follows the preliminary injunction Michigan won against Kalshi, which raised the penalty to $500,000 a day

A Withdrawal That Is Not an Admission

Robinhood has agreed to pull its sports event contracts out of Michigan, according to a report by CDC Gaming, holding that position at least until the US Court of Appeals for the Sixth Circuit rules on appeals involving the company, Coinbase and Kalshi, and until the state court case against Kalshi is resolved.

The company was careful about what it was conceding. "While we do not believe these contracts violate any state laws, beginning on (Wednesday), we will restrict customers in Michigan from entering new sports-related event contract positions," a Robinhood spokeswoman said in a statement. Access to the wider prediction markets hub continues, so the restriction is specific to sports.

What Robinhood gets in return is the part worth noting. Michigan officials agreed not to enforce state sports betting laws against the company while it complies. The arrangement expires on final resolution of the Sixth Circuit cases, including any Supreme Court proceedings should a party seek a writ of certiorari, or on dissolution of the preliminary injunction in the state case between the attorney general and Kalshi.

That injunction is the backdrop. Ingham County Circuit Court Judge Rosemarie E. Aquilina ordered Kalshi to stop offering, listing, executing, settling or otherwise facilitating sports event contracts for anyone located in Michigan. "Michigan and its most vulnerable citizens are suffering and will continue to suffer immediate and irreparable harm absent relief from being exploited by Kalshi's sports betting operation masquerading as an investment opportunity," she wrote in a five-page filing, adding that Kalshi eludes the patron-protection mechanisms in Michigan's regulatory framework and that its failure to comply gives it a "massive and unfair advantage" over licensees that do.

Attorney General Dana Nessel, who brought the proceedings for the state, said she was relieved the order "further protects Michigan residents from its predatory practices". The Michigan Gaming Control Board and the attorney general's office did not respond to messages, according to the report.

Robinhood Has Made the Calculation Kalshi Refuses To

Kalshi has fought every state, lost repeatedly, kept operating and absorbed escalating penalties, most recently at $500,000 a day in this very jurisdiction. Robinhood has looked at the same statute and quietly geofenced. The difference is not legal analysis, it is what each company is protecting: Kalshi's entire business is event contracts, so a concession in Michigan is a template every other attorney general will copy. Robinhood is a listed brokerage with tens of millions of customers for whom sports contracts are an add-on, and no enforcement action is worth the licensing risk to the rest of it. Expect the same divergence in every state that moves next.

The Deal Is Narrow, and Both Sides Know Exactly How Narrow

Michigan has not obtained a ruling that Robinhood's contracts are illegal, and Robinhood has not conceded that they are. What the state has is a company out of the market and an agreement not to prosecute while that holds; what Robinhood has is optionality, because the moment the Sixth Circuit rules in the exchanges' favour, or the Kalshi injunction dissolves, the restriction lapses automatically. Neither side has spent anything. That is a sensible outcome for both and a poor one for anybody hoping the courts will settle the question quickly.

The Prediction Markets Hub Staying Open Is the Detail to Watch

Robinhood has withdrawn sports contracts and kept everything else, which draws a line that no US regulator has yet drawn in law: sports events on one side, elections, economics and everything else on the other. That is the distinction the New Jersey petition to the Supreme Court is asking to have settled, and it is also the distinction Robinhood is now operating as though it already exists. If the Sixth Circuit or the Supreme Court declines to draw it there, this arrangement is the first casualty.

Robinhood spent the summer building an exchange and is now the first of the big platforms to voluntarily leave a state. That is worth more as a signal than any of its filings.