BOSTON – Massachusetts' top securities regulator has launched a study into trading platform Robinhood's decision to launch a forecast market hub that allows users to wager on the outcomes of various events, including the March Madness College basketball tournament.
The Massachusetts Secretary of State said in an interview with Reuters on Monday that Robin Hood is “linking gambling events to brokerage accounts at sporting events that are particularly popular with young people.”
“This is another gimmicks-from a company where Gimmicks is so good, it separates investors from healthy investments,” said Galvin, a Democrat known as one of the nation's most offensive state-level securities regulators.
His office sent Robinhood a subpoena last week to seek information related to the number of account users for brokerage companies in the state.
Event contracts allow traders to bet on specific results and offer opportunities to benefit from all forecasts, ranging from sports and entertainment to politics and economics.
Their growing popularity has encouraged a fierce debate between traders who embraced the new asset class and critics who likened it to gambling.
The subpoena asks for copies of Robinhood marketing materials and asks them to identify all residents in the state in a securities account with a company that requested the university's sporting event contracts to be exchanged, officials said.
In a statement, a Robinhood spokesperson said the event contracts offered will be regulated by the US Commodity Futures Trading Commission and provided through CFTC registered entities.
“The forecast market is becoming increasingly important to retailers and institutional investors, and we are proud to be one of the first platforms to deliver these products to retail customers in a safe and regulated way,” a spokesperson for Robinhood said.
Menlo Park, California-based Robinhood said the forecast market will first become available across the US through derivative trading platform Kalshi Ex, with eligible customers being able to bet on the outcome of upcoming college basketball tournaments.
Announced on March 17th, Robinhood scrapped its event contract in response to CFTC's request, allowing users to bet on the Super Bowl results immediately after launch.
It has been in contact with CFTC in recent weeks after announcing the launch of the forecast market ahead of the Robin Hood NCAA's men's and women's college basketball tournament, and says it will continue to work with regulators.
The CFTC did not immediately respond to requests for comment.
As part of a request for records from Robinhood, the issued office of Subpoena Galvin is seeking internal communications regarding its decision to roll out the university's event sporting contract despite previous CFTC requests in February, officials said.
Republican President Donald Trump's candidate to lead CFTC; Brian Quintzserving on the board of directors of Calci, and the president's son, Donald Trump Jr., serves as strategic adviser to Calci.
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This case shows the latest legal position between Galvin and Robinhood. In 2020, his office accused Robin of encouraging inexperienced investors to use a “gamification” strategy to place risky transactions without restrictions, including confetti rainfall in each transaction made on the app.
Robinhood in 2024 agreed to pay $7.5 million to resolve these claims, and announced the issues revealed through another investigation into a 2021 data security breaches by Galvin's office.
