Robinhood paused its sports prediction markets in Nevada after a federal judge denied its request for a temporary injunction against the Nevada Gaming Control Board, the NGCB announced on Tuesday. The company agreed to suspend these contracts, effective Dec. 1, pending the outcome of further litigation.
Key Takeaways
- Robinhood agreed to halt Nevada sports prediction markets after a federal ruling denied its request for temporary relief.
- The NGCB maintains unlicensed sports event contracts constitute illegal wagering, prompting stepped-up enforcement actions.
- Robinhood's operational pause comes as the company posts strong quarterly earnings and expands into new business lines.
The ruling mirrored a similar setback for Crypto.com and followed the court's conclusion that the company must stop offering sports event contracts in the state until further review. The dispute stems from a cease-and-desist order issued earlier in the year, as well as renewed legal challenges involving Robinhood's partner, Kalshi, and the NGCB's position that unlicensed sports event contracts violate Nevada law.
Robinhood's halt follows Judge Andrew Gordon's decision that the company could not continue operating prediction markets in Nevada while the case was ongoing. The judge reversed Kalshi's earlier injunction, which Robinhood argued should have applied to its own operations as its contracts were routed through Kalshi's exchange.
The court rejected that interpretation after reviewing new information, determining that Robinhood knowingly reopened access to Nevada, assuming any resulting reputational impact.
Robinhood disagrees and plans to appeal. While it and Crypto.com paused activity, Kalshi has not, prompting the NGCB to consider further action. NGCB chairman Mike Dreitzer said the exchange declined to suspend its markets and instead sought a stay during its appeal.
The NGCB reiterated that its October guidance already led FanDuel and DraftKings to choose prediction markets over regulated sports betting in Nevada.
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Robinhood reports strong Q3 results; expanding strategy
The regulatory pause arrives during a period of strong financial performance for Robinhood. The company exceeded Wall Street expectations for the third quarter, delivering earnings per share of $0.61 compared to the projected $0.53.
The company's revenue of $1.27 billion exceeded expectations and more than doubled from the previous year. Net income went up to $556 million. It represents a significant increase from the $150 million recorded at the same time last year.
Robinhood's transaction-based revenue was $730 million, which was a little less than independent estimates. However, the company continued to diversify its revenue streams and stated prediction markets and Bitstamp are now generating approximately $100 million in total annual revenue.
By entering the wealth management sector, Robinhood has also become more competitive with Coinbase. It has offered deposit bonuses to attract customers from companies like Fidelity and Schwab, which has helped bring in a significant amount of new business.
The company increased its number of assets under management when it acquired TradePMR, which added a new level of advisory and custodial services.
