Massachusetts’ Securities Regulator Probes Robinhood

Massachusetts’ top securities regulator has launched a probe into Robinhood regarding its new in-app prediction markets hub, allowing customers to bet on outcomes of events, including March Madness match-ups.

According to a report from Reuters, Massachusetts Secretary of State Bill Galvin sent Robinhood a subpoena last week seeking details about Massachusetts users interested in trading college sports event contracts, along with 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. His office confirmed the investigation to CoinDesk, noting Robinhood’s response to the subpoena is due on April 3.

Robinhood’s prediction market, launched on March 17 and powered by the Commodity Futures Trading Commission (CFTC)-regulated Kalshi, included March Madness event contracts and one linked to the fed funds rate target in May. Robinhood stated it maintained communication with the CFTC leading up to the launch.

A Robinhood spokesperson emphasized that the event contracts are “regulated by the CFTC and offered 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 highlighted.

Previously, the trading platform attempted to launch its prediction markets hub in February, ahead of the Super Bowl, but delayed it upon the CFTC’s request.