Case 1:25-cv-12578-RGS Document 1 Filed 09/15/25 Page 11 of 28
contracts). If the CFTC does not act within that window, the new contract is deemed approved
and becomes effective. See 7 U.S.C. § 7a-2(c)(2).
32.
Fundamental differences in how contract markets and sportsbooks operate
mean they are susceptible to different forms of risk to participants. Contract markets leverage
the power and rigor of financial markets to provide traders with liquidity and transparency, and
prices are set by market participants. Customers can manage risk by adjusting or exiting their
positions up until the contract expires, and prices respond accordingly. These markets may be at
risk of market manipulation and other market distortions and inefficiencies. Sportsbooks, by
comparison, have a line set by the house, which is typically set ahead of time and, once a bet is
placed, does not change for that bet. Gamblers bet directly against the house, and once a position
is entered, gamblers typically do not have the option to exit their position. Sportsbooks risk
exploitation of gamblers due to the power imbalance between the house and the gambler. Based
on these different risks, it makes sense that contract markets and sportsbooks are subject to two
different modes of regulation. The federal regulations that govern commodity futures and swaps
trading have as a major focus creating and maintaining fair and efficient markets for trading, see
17 C.F.R. §§ 38.250, 38.151, whereas sportsbooks are regulated by state law and subject to the
police powers of the state to halt and remedy any exploitation of gamblers.
33.
Robinhood is registered with the CFTC as a futures commission merchant.
As relevant here, an FCM is “an individual, association, partnership, corporation, or trust that is
engaged in soliciting or in accepting orders for the purchase or sale of a commodity for future
delivery; a security futures product; a swap” or certain other transactions and “in or in
connection with [those activities], accepts any money, securities, or property (or extends credit in
lieu thereof) to margin, guarantee, or secure any trades or contracts that result or may result
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