Robinhood’s event contracts continue to attract regulatory attention, with the Massachusetts securities regulator launching an investigation into the company’s recent move.
Massachusetts Secretary of State Bill Galvin is reportedly scrutinising Robinhood’s decision to launch its predictions market hub, which went live earlier this month. The hub drew significant attention, partly due to its timing – coinciding with the start of the NCAA March Madness college basketball tournaments.
Galvin, known as one of the most aggressive state securities regulators, criticised the launch in an interview with Reuters earlier this week, calling it a “gimmick from a company that’s very good at gimmicks”.
His office is particularly interested in how many brokerage account users in Massachusetts have requested to trade contracts tied to college sports events since the tournaments began.
Last week, Galvin issued a subpoena to Robinhood, seeking copies of its marketing materials and requesting the company to identify all state residents with brokerage accounts who expressed interest in trading college sports event contracts.
In the same interview with Reuters, Galvin raised concerns about tying gambling-related products to investment platforms, particularly those with younger audiences.
He said: “This is just another gimmick from a company that’s very good at gimmicks to lure investors away from sound investing.”
Event contracts have stirred national debate across the US this year. Like Galvin, many critics question why these contracts are not classified as gambling.
However, the Commodity Futures Trading Commission (CFTC) has allowed Robinhood to offer such products, provided they’re run through a CFTC-registered entity, which in this case is Kalshi.
Earlier this year, Robinhood was asked to withdraw its event contracts after offering users the ability to bet on the NFL Super Bowl. The company maintains that it has been in “close contact” with the CFTC in the lead-up to its latest launch.
Critics have also pointed to political influence in regulatory decisions. Many believe that the appointment of Brian Quintenz as Head of the CFTC by US President Donald Trump is playing a role in this regulatory shift, especially since Quintenz previously served on Kalshi’s board of directors.
