I did a quick test using the latest versions of both add-ons (GF v1.8.3 and Auth.net v1.5) and this worked as anticipated. Does your Auth.net account support Automated Recurring Billing (ARB)? If yes, and you're still having issues, Gravity Forms support can help you get this figured out.
Note to moderators: I would have left this as a comment given that is isn't an actual answer to the issue but I do not have enough reputation to leave comments.