Is Robinhood legal in Kentucky?

Attorney General Russell Coleman filed the complaint in Franklin Circuit Court on June 17, 2026 (No. 26-CI-00689). It names nine defendants: five Kalshi companies, Robinhood Markets, Robinhood Derivatives, Webull and Coinbase Financial Markets (p.1). It describes Robinhood Derivatives as a wholly owned subsidiary of Robinhood Markets and a futures commission merchant (p.5, ¶18). The state's theory is that the defendants "are not licensed to offer online sports wagering in Kentucky" and that their event contracts "fall squarely within the definition of “sports wagering” under Kentucky law" (p.2, ¶¶3-4).

As to Robinhood, the complaint alleges that it partnered with Kalshi in March 2025 on a prediction markets hub that lets its users trade Kalshi's event contracts, and that Robinhood and Kalshi "each receive a fee whenever an event contract is purchased" there (p.16, ¶64). It also alleges that Robinhood offers in-game wagering and "combos" that work like parlays (pp.22-23, ¶¶82, 87), and no self-exclusion option (p.34, ¶117). Four counts name the two Robinhood companies (pp.40-45):

• two under the Kentucky Consumer Protection Act: one for conveying "the false, deceptive, and misleading impression" that its sports contracts "are lawful, and not void, in Kentucky" (¶154), one for the "unauthorized offering and facilitation of sports gambling" (¶160);
• one under the Loss Recovery Act, KRS 372, which treats each Robinhood company as a "winner" on Kentuckians' wagers because it took a fee, and seeks treble the money lost (¶¶173-174);
• one under KRS 528.100, which calls Robinhood's website and apps "gambling devices" and seeks $25,000 for each device and an order stopping their operation (¶¶179, 181).

The relief requested also includes penalties of up to $2,000 for each willful consumer protection violation, restitution or disgorgement, and temporary and permanent injunctions (pp.55-56). Those are Kentucky's allegations and requests. No court has decided any of them.

Two days after the state filed, Kalshi's companies filed a notice of removal moving the case to the Eastern District of Kentucky as No. 3:26-cv-00048, before Judge Robert E. Wier. The notice says Robinhood and Coinbase "consent to removal," relies on 28 U.S.C. §§ 1331 and 1442 (ECF 1, p.1), and says event contracts are a type of "swap" under the Commodity Exchange Act (p.2, ¶1).

Kentucky moved to send the case back on July 20, 2026, saying "Subject matter jurisdiction does not exist," and asked for costs and fees under 28 U.S.C. § 1447(c) (ECF 29, p.1). Kalshi's companies opposed on August 10. Their position is that "Kentucky seeks to stop the trading of federally regulated derivatives on a CFTC-regulated exchange" (ECF 35, p.1). A footnote says Robinhood joins the brief's first argument, that the claims raise federal questions, and that "proper removal under 28 U.S.C. § 1442 removes the entire case, including non-officer defendants" (p.1 n.1). The brief describes Robinhood Derivatives as a CFTC-registered futures commission merchant that has partnered with KalshiEX (p.6).

Kentucky replied on August 31 that Kalshi's federal argument is an anticipated preemption defense, and "a preemption defense cannot support removal" (p.1). The motion went to Judge Wier's chambers on September 1. We found no ruling through the docket entries of September 22, 2026, though CourtListener can lag the court's own system.

No order or filing we found in the Kentucky case addresses accounts, open positions, deposits or withdrawals, and no court has granted the injunctions Kentucky asks for. Robinhood's event contract restrictions page, read October 21, 2026, lists state restrictions for Maryland and Nevada residents and none for Kentucky.

Two of Kentucky's requests would reach customers' trades if a court granted them. The Loss Recovery Act count says each Kentucky wager on Robinhood's platform, and each transfer of money with it, "is void" (complaint p.42, ¶169), and asks for treble the money lost. The consumer counts ask for restitution. A count in a complaint is a request, and no court has ruled on either.

Judge Wier decides whether the case stays in federal court. Robinhood has not answered the complaint: a September 4, 2026 order by Magistrate Judge Edward B. Atkins gives it 30 days from that ruling to respond (ECF 43). If the case returns to Franklin Circuit Court, the four counts would be argued there under Kentucky law.

Kentucky's federal courts sit in the Sixth Circuit, which held on September 25, 2026, in Kalshi's Ohio and Tennessee cases, that Kalshi "has not shown that its sports-event contracts satisfy the statutory definition of a “swap”," and in the alternative that federal law "neither expressly nor impliedly preempts" those states' gambling laws (opinion, p.3). It is a ruling at the preliminary-injunction stage and does not name Robinhood. In Kentucky's separate case against Polymarket, No. 3:26-cv-00047, a magistrate judge recommended on October 14 that the case go back to state court (report, p.13). That is a recommendation in another case, not an order in Robinhood's: is Polymarket legal in Kentucky? follows it.

The federal government's position runs the other way. The United States and the CFTC sued Kentucky on June 23, 2026, in United States v. Commonwealth of Kentucky, No. 3:26-cv-00049, before Judge S. Chad Meredith, and Kalshi's companies cite that suit as a reason the questions belong in federal court (ECF 35, p.3). Motions to dismiss and for summary judgment are pending there; on October 5 the court canceled the October 9 argument for supplemental briefing, and we found no ruling (docket). Whether federal commodities law preempts state gambling law is also before the Supreme Court in petitions that include Robinhood's own, No. 26-338, from its Nevada case; Kalshi at the Supreme Court follows them.

Nothing in the case addresses federal tax, and a state gambling case isn't a ruling on federal income tax. How people report a Robinhood event contracts year is on Robinhood event contracts taxes, and every other state is on Robinhood's legal status page.