Massachusetts’ securities regulator has reportedly launched a probe implicit Robinhood’s prediction markets offering that has allowed users to stake connected the outcomes for a slew of events, including hoops tournaments.
Reuters reported connected March 24 that Massachusetts Secretary Bill Galvin said his bureau subpoenaed Robinhood past week to get accusation connected its selling materials and the fig of Massachusetts-based users that traded sports events contracts connected assemblage hoops tournaments.
Galvin said helium was acrophobic the trading level 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,” helium added.
Robinhood launched a prediction markets hub connected March 17 that would beryllium initially disposable done the Commodity Futures Trading Commission-regulated prediction level Kalshi and would diagnostic lawsuit contracts connected assemblage hoops tournaments and the May national funds rate.
A Robinhood spokesperson told Cointelegraph that the lawsuit contracts “are regulated by the CFTC 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 spokesperson said.
Robinhood Markets (HOOD) stock terms remained comparatively level aft the adjacent of trading connected March 24 aft an implicit 9% leap implicit the time to adjacent astatine $48.36, according to Google Finance.
Robinhood is up astir 30% truthful acold this twelvemonth but has fallen from its Feb. 14 all-time highest of $65.28. Source: Google Finance
The CFTC and Galvin’s bureau did not instantly respond to requests for comment.
Event contracts are agreements that let users to stake connected the result of fundamentally anything, from sports games to predetermination outcomes and the terms of cryptocurrencies.
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They were popularized connected the blockchain-based prediction market Polymarket and non-decentralized rival Kalshi and person caught the ire of immoderate regulators.
Last month, Robinhood scrapped lawsuit contracts allowing for bets connected the Super Bowl a time aft launching the products aft the CFTC asked it to.
The Massachusetts probe besides requested Robinhood manus implicit interior communications astir the determination to rotation retired the caller assemblage hoops events contracts aft the CFTC’s petition to halt the Super Bowl contracts.
The CFTC besides reportedly asked Kalshi and Crypto.com aboriginal past period to explicate however some of their Super Bowl lawsuit contracts complied with derivatives regulations.
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