A Georgia man is asking a federal judge in San Jose to shut down what he says was a hidden sportsbook tucked inside Robinhood’s trading app. In a new complaint, he claims the company sold point spreads, parlays and player-prop style bets as event contracts to ordinary brokerage customers and now wants the courts to unwind the wagers and claw back profits.
San Jose filing sets sights on billions
Matthew Mazza filed a class-action complaint last Wednesday in the U.S. District Court for the Northern District of California, San Jose Division. According to Justia Dockets & Filings, the suit is styled Mazza v. Robinhood Markets, Inc. and Robinhood Derivatives, LLC (No. 3:26-cv-05610). Reporting on the complaint says plaintiffs are seeking to recover billions of dollars on behalf of a nationwide class and a separate Georgia subclass.
How the prediction hub took shape
Robinhood launched a Prediction Markets Hub in its app in March 2025 and, as part of the rollout, routed event contracts through KalshiEX, a CFTC-regulated exchange. In regulatory complaints and civil filings, plaintiffs trace product expansion through 2025, including pro and college football markets and, in December, preset combos, custom combos and player contracts that critics say closely mirror sportsbook spreads, parlays and player props. Those filings also estimate billions of contracts and a large Super Bowl-period handle. According to a recent complaint document, more than 12 billion event contracts were traded on Robinhood in 2025, and an estimated $285 million was traded on the Super Bowl winner market alone.
What Mazza says Robinhood did wrong
The Mazza complaint alleges Robinhood marketed the Prediction Markets Hub as an investing product while letting customers place bets on margin against their stock holdings and without clear point-of-trade warnings. As reported by Claim Depot, Mazza says he lost roughly $400,000 in fees, commissions and wagers and asks the court to force Robinhood to return users' wagers, disgorge profits and stop offering the contracts.
Regulators, Congress and a national fight
Prediction markets have already drawn scrutiny from regulators. The CFTC intervened when Robinhood first tried to offer Super Bowl markets in February 2025, leading the company to pause those contracts, and state regulators in multiple jurisdictions have issued cease-and-desist actions. Reporting on those actions is detailed by The Boston Globe.
At the same time, Congress is weighing restrictions. A bipartisan bill called the "Prediction Markets Are Gambling Act" reached the Senate in March 2026. For background on that proposal see GovInfo. And in May 2026, Minnesota became the first state to bar prediction markets by statute, a move that prompted a federal challenge from the CFTC. Coverage of those developments is summarized by Gaming Intelligence.
Legal claims and what is on the line
The complaint brings multiple causes of action, including gambling-loss recovery statutes in various states, Georgia’s O.C.G.A. § 13-8-3, the Georgia Fair Business Practices Act, California’s Unfair Competition Law and unjust enrichment claims. As reported by Claim Depot, plaintiffs seek restitution, disgorgement and an injunction to stop Robinhood from offering these contracts.
Robinhood’s stance and what comes next
Robinhood has repeatedly said its event contracts are offered through Robinhood Derivatives and distributed via CFTC-regulated channels, and the company has told regulators it is working with the agency as the product evolves. For the company’s description of the hub and its regulatory view, Robinhood points to its newsroom post on the prediction markets hub. Litigation over whether event contracts are federally regulated derivatives or state-level gambling is already underway in multiple courts and is likely to produce quick motions over preemption, injunctions and jurisdictional reach. Recent coverage of the wider litigation landscape is available from legal outlets tracking state-by-state lawsuits and federal preemption fights.
Observers should expect early motion practice and fast turns. Plaintiffs will push to certify classes and seek refunds, while defendants press preemption and regulatory defenses, setting up a national test of whether apps can package sportsbook-style wagers as investing products. The San Jose complaint now sits alongside a raft of state enforcement actions and related private suits that together could reshape how prediction markets operate in the United States.
