Massachusetts Regulator Opens Investigation Into Robinhood's Sports Betting Feature

Massachusetts' top securities watchdog has opened an investigation into Robinhood's HOOD latest venture—a prediction markets tool letting users wager on outcomes like college basketball games.

The state's Secretary of State, Bill Galvin, is digging into whether the trading app's new feature blurs the line between investing and gambling, especially for younger users hooked on sports, Reuters reported on Tuesday.

Galvin's office fired off a subpoena to Robinhood last week, seeking details on how the service and how many locals are betting on hoops tournaments.

Galvin also voiced concerns the platform may tie brokerage accounts to what he sees as a betting spree on popular events

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Robinhood rolled out its prediction hub on March 17, partnering with Kalshi, a platform overseen by the Commodity Futures Trading Commission (CFTC), to offer bets on basketball and even interest rates.

A company rep defended it, noting the contracts are CFTC-regulated and open up prediction markets to ‘everyday investors." “retail and institutional investors alike.”

Still, the move has drawn scrutiny—Massachusetts wants Robinhood's internal chats about launching this after the CFTC nixed its Super Bowl betting contracts last month.

Robinhood withdrew its Super Bowl contracts only a day after their debut, following concerns raised by the CFTC.

Massachusetts regulators are now also requesting internal discussions tied to Robinhood's rollout of college basketball contracts soon after the Super Bowl offering was halted.

Regulatory scrutiny has extended to firms like Kalshi and Crypto.com, with questions over whether their Super Bowl prediction products comply with derivatives regulations.

The company’s stock held steady after hours on March 24, despite a 9% daytime leap to $48.36.

Prediction markets, a hit on platforms like Polymarket and Kalshi, let people bet on anything from games to crypto prices, but regulators aren't all sold.

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