--- title: "Robinhood's $173 million event-contract line, bigger than equities, is being shut off state by state" description: "Robinhood has agreed to stop selling new sports event contracts in Ohio and to close existing Michigan positions while appeals run. The line being clipped out-earned its stock-trading business in the September quarter." publisher: "The Inference" section: "Economy" published: 2026-11-05T16:26:44.747Z modified: 2026-11-05T16:26:44.747Z canonical: https://theinference.org/article/robinhood-s-173-million-event-contract-line-bigger-than-equities-is-being-shut-off-state-by-state language: en keywords: "Robinhood, Kalshi, Prediction Markets, Regulation, Fintech" --- # Robinhood's $173 million event-contract line, bigger than equities, is being shut off state by state > Robinhood has agreed to stop selling new sports event contracts in Ohio and to close existing Michigan positions while appeals run. The line being clipped out-earned its stock-trading business in the September quarter. [Robinhood](https://theinference.org/markets/companies/robinhood) is shutting down its best-paying product to buy legal peace, state by state. Its [quarterly filing](https://www.sec.gov/Archives/edgar/data/1783879/000178387926000167/hood-20260930.htm) discloses that on October 26 the brokerage agreed to stop offering new sports event contracts in Ohio by November 2, a deadline now passed, in exchange for the state's casino regulator holding off enforcement while appeals run [4]. A parallel deal with Michigan went further and closed existing customers' sports positions by October 9 [4]. Robinhood made the same trade in Nevada almost a year ago [4]. ## Twelve cents on a stock order, twenty-one dollars on a bet The stakes are in the [price list](https://coinpaper.com/38296/why-robinhood-can-earn-175-times-more-from-a-prediction-trade-than-a-stock-trade). A $1,000 stock order earns Robinhood about 12 cents [2]. The same money in event contracts, fixed-price bets that pay $1 if the predicted outcome happens, earns about $21, because the platform takes roughly a cent on every contract that fills the order [2]. Launched through the exchange [Kalshi](https://theinference.org/markets/companies/kalshi) in March 2025 [2], the line [passed equities in the September quarter at $173 million](https://markets.businessinsider.com/news/stocks/robinhood-reports-third-quarter-2026-results-1036672890), cushioning a crypto business that fell by half [3]. The four cuts behind that gap are the ones we charted in [September](https://theinference.org/article/robinhood-takes-four-cuts-of-one-retail-trade). *Chart: **Event contracts passed equities and crypto in Q3** Bar chart of Robinhood's Q3 2026 transaction revenue by product line* *Transaction-based revenue by product, quarter ended September 30, 2026, US$ millions. Source: Robinhood Q3 2026 results. [3]* ## The bottleneck moved from distribution to jurisdiction Robinhood had solved distribution: it carried contracts listed on an exchange regulated by the Commodity Futures Trading Commission into 28.7 million funded accounts [3]. The industry's theory was that such contracts sit under exclusive federal jurisdiction, out of state gaming regulators' reach [5]. [A September 25 ruling by the Sixth Circuit Court of Appeals](https://www.jdsupra.com/legalnews/sixth-circuit-deepens-circuit-split-2315499/) rejected that theory for sports: the contracts are not "swaps" under the Commodity Exchange Act, the court held, and federal law does not override Ohio's or Tennessee's gambling statutes [1][5]. Ohio's Casino Control Commission [sent cease-and-desist letters to ten prediction-market operators on October 2](https://rg.org/news/prediction-markets/robinhood-ohio-sports-event-contracts-occc-agreement-sb-430), the move we [reported when it landed](https://theinference.org/article/robinhood-has-until-october-16-to-answer-ohio-on-the-prediction-markets-that-out-earned-crypto) [1]. Robinhood agreed 24 days later [4]. ## Courts, not customers, now cap the line What limits this line now is how each court classifies the contracts, not customer demand, and the circuits have split: the Third Circuit ruled for the operators, the Ninth and the Sixth against them [5]. ## The enforcement protects Ohio's licensed sportsbooks Michigan customers have been closed out of positions they chose [4]. Robinhood reports event-contract revenue as a single line, so the clipped share of the $173 million cannot be measured from the filing [3]. The Ohio commission also told its licensed sportsbooks to stop serving unlicensed event-contract operators [1]. Robinhood's replacement book is already revenue: bitcoin and gold contracts, and Rothera, its exchange venture with the trading firm Susquehanna International Group, past $100 million in annualized revenue [2][3]. ## The December quarter is the first clean print The watch item is the December-quarter report, the first print with no new Ohio or Michigan sports contracts on the books. Until then the line's size is being decided elsewhere: Kalshi's request for a full-court rehearing at the Sixth Circuit, Robinhood's petition to the Supreme Court, and a proposed Commodity Futures Trading Commission rule that would define event contracts as swaps, which two appeals courts have said they are not [1][4][5]. ## Takeaway Robinhood is buying legal peace state by state, giving Ohio's casino regulator and Michigan their way on the event-contract line that out-earned equities at $173 million in Q3 while appeals courts and the CFTC decide whether the contracts are bets or swaps. ## Sources 1. [RG.org, Robinhood Agrees to Stop New Sports Event Contracts in Ohio, 4 November 2026](https://rg.org/news/prediction-markets/robinhood-ohio-sports-event-contracts-occc-agreement-sb-430) 2. [Coinpaper, Why Robinhood Can Earn 175 Times More From a Prediction Trade Than a Stock Trade, 5 November 2026](https://coinpaper.com/38296/why-robinhood-can-earn-175-times-more-from-a-prediction-trade-than-a-stock-trade) 3. [Robinhood Markets press release via Markets Insider, Robinhood Reports Third Quarter 2026 Results, 27 October 2026](https://markets.businessinsider.com/news/stocks/robinhood-reports-third-quarter-2026-results-1036672890) 4. [Robinhood Markets Form 10-Q for the quarter ended 30 September 2026, SEC EDGAR, filed 28 October 2026](https://www.sec.gov/Archives/edgar/data/1783879/000178387926000167/hood-20260930.htm) 5. [Blank Rome LLP via JD Supra, Sixth Circuit Deepens Circuit Split: Kalshi Sports-Event Contracts Are Not Swaps, and the CEA Does Not Preempt State Gambling Laws, 8 October 2026](https://www.jdsupra.com/legalnews/sixth-circuit-deepens-circuit-split-2315499/) --- Robinhood's $173 million event-contract line, bigger than equities, is being shut off state by state — The Inference. Canonical: https://theinference.org/article/robinhood-s-173-million-event-contract-line-bigger-than-equities-is-being-shut-off-state-by-state