Massachusetts regulators probe Robinhood over March Madness basketball betting

Nate Raymond

Mon, Mar 24, 2025, 10:38 AM 3 min read

By Nate Raymond

BOSTON (Reuters) -Massachusetts' apical securities regulator has launched an probe into trading level Robinhood's determination to motorboat a prediction-markets hub that allows users to stake connected the outcomes of a scope of events, including March Madness assemblage hoops tournaments.

Massachusetts Secretary of State Bill Galvin, successful an interrogation with Reuters connected Monday, said helium was acrophobic that Robinhood was "linking a gambling lawsuit connected a fashionable sports lawsuit that's particularly fashionable to young radical to a brokerage account."

"This is conscionable different gimmick from a institution that's precise bully astatine gimmicks to lure investors distant from dependable investing," said Galvin, a Democrat known arsenic 1 of the country's astir assertive state-level securities regulators.

His bureau sent Robinhood a subpoena past week seeking accusation related to however galore of its brokerage relationship users successful the authorities person requested to commercialized assemblage sports events contracts arsenic the men's and women’s assemblage hoops tournaments got nether way, an authoritative said.

Event contracts let traders to stake connected circumstantial outcomes, offering opportunities to nett from predictions connected everything, from sports and amusement to authorities and the economy.

Their rising popularity has fueled a heated statement betwixt traders who person embraced the nascent plus people and critics who person likened it to gambling.

The subpoena seeks copies of Robinhood selling materials and asks the institution to place immoderate and each residents successful the authorities with brokerage accounts with the institution who requested to commercialized assemblage sports events contracts, the authoritative said.

A spokesperson for Robinhood successful a connection said the events contracts it offers are regulated by the U.S. Commodity Futures Trading Commission and offered done CFTC-registered entities.

"Prediction markets person go progressively applicable for retail and organization investors alike, and we're arrogant to beryllium 1 of the archetypal platforms to connection these products to retail customers successful a harmless and regulated manner," the Robinhood spokesperson said.

Menlo Park, California-based Robinhood has said its prediction markets volition initially beryllium disposable crossed the U.S. done derivatives trading level KalshiEX, and eligible customers volition beryllium capable to stake connected the results of the upcoming assemblage hoops tournaments.

Its unveiling connected March 17 came a period aft Robinhood astatine the petition of the CFTC had scrapped lawsuit contracts allowing users to stake connected the result of the Super Bowl, conscionable a time aft its launch.