Massachusetts is urging a court to deny Robinhood’s request to halt state regulators from applying gambling laws to its event-driven trading services, intensifying a larger national dispute regarding the classification of prediction markets under either federal commodities law or state gambling regulations.

The state has submitted a document countering Robinhood’s plea for a temporary injunction, asserting that federal regulations do not override state governance in relation to gambling and sports contracts.

Massachusetts refuted Robinhood’s argument that its sports outcome-based products are permissible across the country, labeling the preemption claim as “mere smoke and mirrors,” and referencing federal court decisions affirming state jurisdiction over gambling laws. The state’s argument also mentioned a parallel case in Nevada concerning Crypto.com, which was barred from offering sports betting.

Robinhood contends that its contracts for sports outcomes should be under the regulation of the U.S. Commodity Futures Trading Commission (CFTC), rather than being under the jurisdiction of state gambling authorities.

A similar legal dispute is occurring in Ohio, where trading platform Kalshi filed a lawsuit against the Ohio Casino Control Commission and the state attorney general on October 7. Kalshi claims that its event-based markets should be federally regulated and is seeking an injunction by October 20 to prevent further state actions.

Officials in Ohio argue that all sports betting must be facilitated through licensed operators, and dismiss Kalshi’s claim that federal law eliminates state regulation.