Massachusetts Regulators Probe Robinhood Over Its College Basketball Prediction Market Hub

Massachusetts’ securities regulator has reportedly launched a probe over Robinhood’s prediction markets offering

Massachusetts’ securities regulator has reportedly launched a probe over Robinhood’s prediction markets offering that has allowed users to bet on the outcomes for a slew of events, including basketball tournaments.

The state’s Secretary of State, Bill Galvin, said his office subpoenaed Robinhood last week to get information on its marketing materials and the number of Massachusetts-based users that traded sports events contracts on college basketball tournaments, according to a March 24 report by Reuters.

The probe follows the CFTC’s request last month for Kalshi and Crypto.com to explain how both of their Super Bowl event contracts complied with derivatives regulations. Event contracts are agreements that enable users to wager on the outcome of essentially anything, such as sports games, elections and the price of cryptocurrencies. They were popularized on the blockchain-based prediction market Polymarket and non-decentralized competitor Kalshi and have drawn the attention of some regulators.

The CFTC and Galvin’s office did not immediately respond to requests for comment.

The probe also seeks any internal communications about the decision to roll out the recent college basketball events contracts after the CFTC’s request to halt the Super Bowl contracts, the report noted.

The news comes as Robinhood scrapped event contracts allowing for bets on the Super Bowl a day after launching the products after the CFTC asked it to.

“We’re unable to comment on any pending legal matters,” a Robinhood spokesperson told Cointelegraph in response to a request for comment.

The firm’s new prediction markets hub, which is being launched in partnership with Kalshi, will initially feature event contracts on college basketball tournaments and the May federal funds rate. The event contracts “are regulated by the CFTC and offered through CFTC-registered entities,” the spokesperson added.

“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.”

Robinhood Markets (HOOD) share price remained relatively flat after the close of trading on March 24 after an over 9% jump over the day to close at $48.36, according to Google Finance.

The firm is up nearly 30% so far this year but has fallen from its Feb. 14 all-time peak of $65.28.