The best securities regulator in Massachusetts has launched an investigation into Robinhood on the recent decision of the popular negotiation platform to launch a prediction market center in the application that allows customers to bet on the outcome of events, including March Madness matches.
According to a Monday report from Reuters, the Secretary of State of Massachusetts, Bill Galvin, – a notoriously aggressive regulator – sent Robinhood a summons last week to seek information on the number of Robinhood users in the Massachusetts who asked for any university sports contracts and in search of copies of related marketing equipment.
“It is only another company gadget that is very good in gadgets to attract investors far from sound investment,” Galvin told Reuters. Galvin’s office confirmed the Coindesk investigation and added that Robinhood’s response was due on April 3.
The Robinhood prediction market, which is fueled by the regulated Kalshi of the Futures Trading Commission (CFTC), was launched on March 17 with event contracts linked to the madness of March, as well as another linked to the higher limit of the target Fed rate in May. At the time of launch, Robinhood told Coindesk that he had been in communication with the CFTC “in recent weeks” leading to the launch.
A Robinhood spokesperson reiterated that the event contracts offered through his prediction market center were “regulated by the CFTC and offered through entities recorded by the CFTC”.
“The prediction markets have become increasingly relevant to retail and institutional investors, and we are proud to be one of the first platforms to offer these products to retail customers in a safe and regulated manner,” added the spokesperson.
The trading platform had previously attempted to launch its prediction market center in February, before the Super Bowl, but delayed the launch at the request of the CFTC.
