Robinhood’s CEO Says States Are Fighting Prediction Markets to Protect Their Own Gambling Tax Money, ‘There’s a Huge Financial Incentive’

Robinhood’s CEO Says States Are Fighting Prediction Markets to Protect Their Own Gambling Tax Money, ‘There’s a Huge Financial Incentive’

Sun, September 6, 2026 at 8:00 PM GMT+3 5 min read

• HOOD -2.09%

The chief executive of Robinhood (HOOD) said on Bloomberg Television late last month that states suing to shut down prediction markets are protecting their own money. "States disagree for various reasons," Vlad Tenev said. "I mean, number one is there's a huge financial incentive from collecting taxes on these state-owned operators for that to be protected."

American Gaming Association figures put state and local tax collections from sports betting at $3.71 billion in calendar 2025, up 32.4% on the year, on $16.96 billion of sportsbook revenue and $166.94 billion of handle. New York, which taxes mobile sports betting at 51%, accounts for roughly a third of the national total on its own; the state's own court filing says mobile operators generated about $2 billion in gross gaming revenue in 2024 and paid more than $1 billion in state taxes. New York and Illinois together produce close to half of everything states collect on sports betting.

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His phrasing was loose in one respect worth correcting. State lotteries genuinely are state-owned and state-operated; 45 states run one, and they transferred about $30.6 billion to their beneficiaries in fiscal 2024, roughly eight times what sports betting produced. Sportsbooks are not. FanDuel and DraftKings (DKNG) are companies that states license and tax; New York does not own a sportsbook. Oregon and Montana are the exceptions, running sports betting through their lotteries, and they are a small share of the 39 jurisdictions where it is legal.

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On the other side of the ledger, prediction markets are growing fast. Kalshi and Polymarket combined for $50.59 billion in trading volume in July, an all-time record, according to data compiled by The Block. That number needs a caveat stated out loud: it is notional volume, not revenue, and not a taxable base. The same contract can be traded repeatedly before it settles, and open interest across the platforms actually fell during July, from about $2 billion to $1.2 billion, while volume was setting a record; the month was inflated by the World Cup.

The part of Tenev's claim that holds up is the part he did not spell out. A CFTC-regulated event contract is a swap traded on a designated contract market, under the commission's exclusive jurisdiction. There is no state gaming license and therefore no state gaming tax and no current way to actually tax it. The Tax Policy Center's Lucy Dadayan modeled the consequence in June: if 5% of sportsbook activity migrated to prediction markets, New York would lose roughly $66 million a year. Her conclusion was measured — revenue erosion of that kind "rarely triggers an immediate budget crisis," she wrote, but it does gradually reduce what a state has to spend.

The CFTC has been trying to stop New York since April, when it sued the state in the Southern District of New York, and it filed an emergency motion on July 30 to bar enforcement against any registered entity. Reporting indicates Judge Jed Rakoff denied that motion in early August. Separately, Judge Analisa Torres ruled on July 7 that the Commodity Exchange Act does not preempt New York gambling law, denying Kalshi an injunction. The Third Circuit went the other way in April, finding preemption likely.

The Supreme Court is not yet involved, despite the way it is usually described. New Jersey has only filed applications to extend its deadline; Justice Samuel Alito granted a second extension on July 24, pushing it to Sept. 3. No petition has been filed, and no case has been accepted. Tenev handicapped it anyway: "Even if the Supreme Court sides in favor of the states, I don't think prediction markets are gone. There's going to be some line drawn, and then we'll obviously have to adapt for that, and of course we'll be pushing for a complete and total victory."

He is describing his own book, and the size of it is now disclosed. Robinhood reported $156 million in event contract revenue in the quarter ended June 30, more than 10 times the year-earlier level, on a record 13.6 billion contracts traded. That put prediction markets ahead of both equities at $129 million and crypto at $100 million, and made them roughly 12% of the firm's $1.31 billion in net revenue. The company's own risk factors warn that enforcement actions or changes in state law "could immediately or subsequently prevent us from offering, or continuing to offer, event contracts." The equity market has been pricing this fight for a while: DraftKings shares have moved on prediction-market news, and analysts have already asked what legislative limits would mean for the betting names.

Tenev's own summary was the least quotable thing he said and probably the most accurate. "It's never as binary as maybe it initially seems."

On the date of publication, Caleb Naysmith did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. This article was originally published on Barchart.com