Massachusetts regulators are currently investigating Robinhood regarding the trading app’s newly introduced ‘Predictions Hub’, which allows users to wager on various event outcomes.
Secretary of the Commonwealth of Massachusetts, Bill Galvin, has issued a subpoena to Robinhood requesting marketing materials and information on how many brokerage account holders in the state have shown interest in trading contracts related to college sports events.
Among the events available for betting are the March Madness college basketball games. Galvin criticized the platform, stating, “This is just another gimmick from a company that’s very good at gimmicks to lure investors away from sound investing.”
In response, Robinhood has stated that the event contracts are regulated by the Commodity Futures Trading Commission (CFTC) and are offered through CFTC-registered entities, specifically KalshiEX. According to CNN, Robinhood launched the predictions hub shortly after the CFTC requested that it withdraw plans allowing users to bet on the Super Bowl outcome.
The company shared, “Prediction markets have become increasingly relevant for retail and institutional investors alike, and we’re proud to be one of the first platforms to offer these products to retail customers in a safe and regulated manner.”
This isn’t the first time Galvin has clashed with Robinhood; last year, the company agreed to settle a 2020 case by paying a $7.5 million fine for allegedly using gamification strategies to encourage continuous use of its services.