San Jose Lawsuit Claims Robinhood Turned Trading App Into Secret Sportsbook

Matthew Mazza filed a class-action complaint in the U.S. District Court for the Northern District of California, San Jose Division, alleging that Robinhood turned its trading app into a hidden sportsbook by offering event contracts that resemble point spreads, parlays, and player-prop bets. The suit, Mazza v. Robinhood Markets, Inc. and Robinhood Derivatives, LLC, seeks billions of dollars for a nationwide class and a Georgia subclass, with Mazza claiming he lost about $400,000 in fees, commissions, and wagers. The complaint says Robinhood launched its Prediction Markets Hub in March 2025, routed contracts through the CFTC-regulated KalshiEX exchange, expanded into football markets and combo contracts, allowed betting on margin against stock holdings, and failed to provide clear point-of-trade warnings. Plaintiffs seek restitution, disgorgement of profits, and an injunction stopping Robinhood from offering the contracts. The case unfolds amid wider scrutiny of prediction markets, including CFTC intervention over Super Bowl markets, state cease-and-desist actions, proposed federal legislation, and Minnesota’s 2026 statutory ban. Robinhood says its event contracts are offered through Robinhood Derivatives via CFTC-regulated channels and that it is cooperating with regulators. The litigation will test whether these products are federally regulated derivatives or state-level gambling, with early disputes expected over class certification, refunds, preemption, injunctions, and jurisdiction.

(Source：Hoodline)