Massachusetts investigates Robinhood’s March Madness event contracts
Massachusetts’ top securities regulator has started a probe into Robinhood’s sports predictions markets, including those covering March Madness, according to an exclusive report from Reuters.
The office of the Secretary of State sent Robinhood a subpoena last week for details on how many Robinhood accounts in Massachusetts had been used for trading college sports events contracts.
Massachusetts Secretary of State Bill Galvin said, “This is just another gimmick from a company that’s very good at gimmicks to lure investors away from sound investing.”
Robinhood launched its event contracts for March Madness on March 17 through its partner trading platform Kalshi.
Event contracts allow customers to “invest” in a yes or no outcome, such as a sports team to win a game. Event contracts are similar to sports betting, especially on events like March Madness.
However, as these markets count as trading, not sports betting, operators don’t need state-by-state approval. Instead, event contracts are regulated by the US Commodity Futures Trading Commission.
A Robinhood spokesperson told Reuters that the US Commodity Futures Trading Commission approves its markets.
The spokesperson commented, “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.”
