Massachusetts Regulator Investigates Robinhood Over Prediction Markets Hub: Reuters

Robinhood introduced its in-app Prediction Markets hub last week, enabling users to wager on March Madness outcomes.

Key Points:

• Massachusetts securities regulator is investigating Robinhood over its event contract offerings, according to Reuters.

• Robinhood recently launched a Kalshi-powered Prediction Markets hub, allowing users to bet on college basketball tournament outcomes and the upper bound of the target Fed funds rate in May.

Massachusetts’ top securities regulator has reportedly opened an investigation into Robinhood over its recent launch of an in-app Prediction Markets hub, which allows users to wager on event outcomes, including March Madness matchups.

According to a Reuters report on Monday, Massachusetts Secretary of State Bill Galvin, known for his aggressive regulatory approach, issued a subpoena to Robinhood last week. The subpoena requests details on how many Massachusetts users have sought to trade college sports event contracts and copies of related marketing materials.

"This is just another gimmick from a company that's very good at gimmicks to lure investors away from sound investing," Galvin told Reuters.

Galvin's office confirmed the investigation, adding that Robinhood’s response is due by April 3.

Robinhood’s prediction market, powered by CFTC-regulated Kalshi, launched on March 17, featuring event contracts tied to March Madness outcomes and the upper bound of the target Fed funds rate in May.

A Robinhood spokesperson emphasized that the event contracts offered through its prediction markets hub are regulated by the CFTC and provided through CFTC-registered entities.

"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," the spokesperson said.

Robinhood had initially planned to launch the hub in February, ahead of the Super Bowl, but delayed it at the CFTC’s request.