WagerMintsIs Robinhood legal? State by state
Last reviewed Nov 3, 2026
8 states
Where does Robinhood stand?
Robinhood is a co-defendant in the same tribal suit and the same Ninth Circuit ruling applies to it.
Robinhood received state cease-and-desist orders in December 2025 and September 2026; we found no court case involving Robinhood in Connecticut.
Robinhood Derivatives' federal suit against the attorney general was closed in the district court in March 2026 and an appeal is pending at the First Circuit (No. 26-1257).
Robinhood agreed with the state to stop new sports event contracts in Michigan and close positions by Oct. 9, 2026.
Robinhood received a cease-and-desist letter; no lawsuit was found.
Robinhood's federal suit against Nevada is still open, and the Ninth Circuit ruled against it on sports contracts on August 28, 2026.
Robinhood Derivatives sued New Jersey's gaming director in August 2025 and we found no ruling in that case.
Robinhood Derivatives sued the Washington Gambling Commission director in federal court on March 30, 2026; no ruling was found.
Federal courts
What have the federal courts said?
States say prediction market sports contracts are bets that their gambling laws cover, while Kalshi and the CFTC say they are swaps, a kind of derivative that only the federal Commodity Exchange Act and the CFTC regulate. The Third Circuit appeals court sided with Kalshi against New Jersey in April 2026, while the Ninth Circuit (Nevada, August 2026) and the Sixth Circuit (Ohio and Tennessee, September 2026) ruled for the states, all at the preliminary stage. The Fourth Circuit (Maryland) heard argument in May 2026 and had not ruled as of November 3. New Jersey's petition to the Supreme Court, Flaherty v. KalshiEX (No. 26-299), is waiting on Kalshi's response due December 7, 2026, and the Court has not yet said whether it will hear the case. On October 9, 2026 the CFTC proposed a rule defining event contracts as swaps.
Your taxes
How are Robinhood trades taxed?
Is Robinhood legal in the US?
Robinhood's position differs by state, and courts have split on whether states can apply gambling laws to these contracts. The states below have an order, lawsuit, letter or law on record that names Robinhood.
Do I owe tax on Robinhood profit if my state is fighting it?
Yes. Federal tax still applies, and IRS Publication 525 says income from illegal activities must be reported too. A state's legal fight doesn't remove tax on profit you already made.
Ask your AI
Ask your AI about your Robinhood year
Answer a few questions and we write the prompt for ChatGPT, Claude, Perplexity or any AI. It carries the four tax methods, your state’s rule and links to the pages behind them, checked November 3, 2026. Or run your actual trades for exact figures, free.
Add rough numbers (optional)
The AI can then work the methods out for your year. Round figures are enough.
Your prompt
1,968 characters
I trade prediction markets on Robinhood. I'm working on my US federal taxes for 2026. From WagerMints, checked November 3, 2026: - No 1099 for event contract trades. Robinhood's help page says so directly, and says the trades aren't reported to the IRS. - An event contracts annual statement, usually in late January or early February, listing every trade, closing dates, costs, proceeds, fees and net profit or loss. Robinhood calls it the authoritative record and says it is not a substitute tax reporting form. - The IRS has published no guidance on how event contracts are taxed. Four ways traders report this: 1. Capital gains: Form 8949 and Schedule D, short- or long-term by holding period. Net losses offset up to $3,000 of other income a year, and the rest carries forward. 2. Section 1256: Form 6781, 60% long-term and 40% short-term however long I held. Positions open on December 31 count as sold at that day's value. Disputed: Camuso and Mukherjee (Tax Notes Federal, June 2026) conclude it isn't available, White & Case argues for it, and the CFTC's October 2026 proposal to call event contracts swaps cuts against it, because Section 1256 excludes swaps. 3. Ordinary income: net result on Schedule 1, line 8z. 4. Gambling: winnings on Schedule 1, line 8b. Losses only on Schedule A if I itemize, only up to winnings, and only 90% of them from 2026. Read these pages: - https://wagermints.com/taxes/robinhood - https://wagermints.com/blog/how-to-report-kalshi-polymarket-taxes My question: How would my year come out under each of the four methods? How to answer: - Say which links you opened, and never describe one you didn't open. If one fails, use the facts above and say so. - Mark each point [linked source], [general tax rule] or [unsettled]. - Put the methods side by side in one table for my year, and state any number you assume. - Don't pick a method for me. End with questions for a CPA or enrolled agent, then anything you need from me.
WagerMints doesn’t see or store what you type here. The prompt goes to the AI you pick, under that company’s terms. Never add your Social Security number, API keys or wallet keys. AI answers can be wrong, so check them against the linked sources and a preparer.