Is Robinhood legal in Michigan?

Robinhood Derivatives, LLC sued Attorney General Dana Nessel and the members of the Michigan Gaming Control Board in federal court in the Western District of Michigan on March 4, 2026 (No. 1:26-cv-00730), after the state brought its enforcement case against Kalshi. The case went to Judge Paul Maloney on March 11 (order).

On June 17 he denied Robinhood a preliminary injunction in a 33-page opinion. He framed the case as "the question of where the state interest in regulating gambling ends and the federal interest in regulating financial derivatives begins" (p.1). In the one clause of the swap definition Robinhood relied on, he found "no clear statement that Congress intended to supersede the states' traditional role in regulating gambling", and added that even if the contracts were swaps, it "is not clear that the statutory framework prevents states from regulating in the porous zone where derivatives and gambling meet" (p.2). Robinhood's possible business losses, "even if irreparable, pale in comparison to the potential losses to the public if Defendants are right on the merits" (p.32). Robinhood appealed the next day.

Then the state court acted against Kalshi. The Ingham County Circuit Court enjoined Kalshi from offering sports-related contracts in Michigan (Kalshi in Michigan covers that order), and the attorney general asked Robinhood to stop its Michigan customers trading them "in light of the State Court Injunction" (ECF 50, p.3). Robinhood asked for time "to communicate to customers and give its Michigan customers sufficient time to effectuate an orderly transition" (p.3).

The parties' stipulation, which Judge Maloney entered as an order on September 4, 2026 ("IT IS SO ORDERED", ECF 50, p.4), has four terms:

• No new sports contracts, on any exchange. Robinhood stops offering new sports-related contracts in Michigan "traded on any DCM, including the DCMs operated by KalshiEx LLC and Rothera Exchange and Clearing LLC, by September 9, 2026, end of day Eastern time" (p.3). Rothera is a CFTC-designated exchange, formerly MIAXdx, bought by a joint venture with Susquehanna that Robinhood controls. No other category of contract is named.
• Open contracts closed. Robinhood closes any sports contract a Michigan customer opened on or before September 9 and has not closed voluntarily, by October 9, 2026, end of day Eastern time (p.4).
• No enforcement meanwhile. While Robinhood complies, the state brings no enforcement action against it over sports-related contracts (p.4).
• Nobody concedes. The agreement is "without prejudice to any party's rights, obligations, or defenses" (p.4).

It runs until the first of two events: the final resolution, by the Sixth Circuit or after any Supreme Court review, of any of four appeals it names (Robinhood's, Polymarket US's, Coinbase's No. 26-1693, or Kalshi's Ohio and Tennessee appeals), or the dissolution of the Ingham County injunction against Kalshi (pp.3-4). The Gaming Control Board announced the agreement on September 9. On October 7 the Board announced that Coinbase Financial Markets had agreed to stop new sports-related contracts for Michigan customers and close open positions, both by 12:00 a.m. Eastern on October 10, 2026; Kalshi in Michigan also covers it.

Under the order, any sports contract still open in a Michigan customer's account at the end of October 9 was to be closed by Robinhood. As of October 23, 2026, we have not found a filing or announcement saying whether that was done or at what prices. The order doesn't mention withdrawals or deposits.

Robinhood's event contract restrictions page, read October 23, 2026, lists restrictions for Maryland and Nevada residents and does not mention Michigan. The court order, not the help page, is what binds Robinhood. Every other state is on Robinhood's legal status page.

Robinhood's appeal is Sixth Circuit No. 26-1542. On July 2, 2026 it was consolidated with Polymarket US's appeal from the same judge, No. 26-1552 (ECF 50, p.2); Polymarket in Michigan follows that side. Our last read of that docket, on October 16, 2026, found no argument date or decision.

The same court has already ruled in Kalshi's appeals, two of the four the order names. On September 25, 2026 it held that Kalshi "has not shown that its sports-event contracts satisfy the statutory definition of a 'swap'", and in the alternative that federal law does not preempt Ohio's or Tennessee's gambling laws (opinion, p.3). The ruling does not name Robinhood, and Kalshi petitioned for rehearing on October 9; Kalshi in Ohio follows that petition. Robinhood's own Supreme Court petition, from its Nevada case (No. 26-338), asks whether federal commodities law preempts state gaming laws for these contracts; the petitions at the Supreme Court are followed together.

Michigan argues that sports contracts offered to its residents are gambling that needs a state license; Robinhood argues they are derivatives on CFTC-regulated exchanges that federal law shields. The order settles who may offer them in Michigan while the appeals run. It says nothing about federal tax, and there is no IRS guidance on event contracts.

Among the people we've seen file, the three most common routes are gambling income under section 165(d), Form 8949 capital gains, and Section 1256 on Form 6781, with its 60/40 split. How each route applies to a Robinhood event contracts year is in Robinhood event contracts taxes.