Robinhood’s CEO Says States Are Fighting Prediction Markets to Protect Their Own Gambling Tax Money, ‘There’s a Huge Financial Incentive’

The chief executive of Robinhood (HOOD) said on Bloomberg Television late last month that states suing to shut down prediction markets are protecting their own money. "States disagree for various reasons," Vlad Tenev said. "I mean, number one is there's a huge financial incentive from collecting taxes on these state-owned operators for that to be protected."

American Gaming Association figures put state and local tax collections from sports betting at $3.71 billion in calendar 2025, up 32.4% on the year, on $16.96 billion of sportsbook revenue and $166.94 billion of handle. New York, which taxes mobile sports betting at 51%, accounts for roughly a third of the national total on its own; the state's own court filing says mobile operators generated about $2 billion in gross gaming revenue in 2024 and paid more than $1 billion in state taxes. New York and Illinois together produce close to half of everything states collect on sports betting.

His phrasing was loose in one respect worth correcting. State lotteries genuinely are state-owned and state-operated; 45 states run one, and they transferred about $30.6 billion to their beneficiaries in fiscal 2024, roughly eight times what sports betting produced. Sportsbooks are not. FanDuel and DraftKings (DKNG) are companies that states license and tax; New York does not own a sportsbook. Oregon and Montana are the exceptions, running sports betting through their lotteries, and they are a small share of the 39 jurisdictions where it is legal.

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On the other side of the ledger, prediction markets are growing fast. Kalshi and Polymarket combined for $50.59 billion in trading volume in July, an all-time record, according to data compiled by The Block. That number needs a caveat stated out loud: it is notional volume, not revenue, and not a taxable base. The same contract can be traded repeatedly before it settles, and open interest across the platforms actually fell during July, from about $2 billion to $1.2 billion, while volume was setting a record; the month was inflated by the World Cup.

The part of Tenev's claim that holds up is the part he did not spell out. A CFTC-regulated event contract is a swap traded on a designated contract market, under the commission's exclusive jurisdiction. There is no state gaming license and therefore no state gaming tax and no current way to actually tax it. The Tax Policy Center's Lucy Dadayan modeled the consequence in June: if 5% of sportsbook activity migrated to prediction markets, New York would lose roughly $66 million a year. Her conclusion was measured — revenue erosion of that kind "rarely triggers an immediate budget crisis," she wrote, but it does gradually reduce what a state has to spend.