Summary

Massachusetts Secretary of State Bill Galvin is investigating Robinhood over its new prediction markets hub, which enables users to place bets on events like college basketball tournaments.

Key Points:

• Robinhood launched its Kalshi-powered prediction market hub, allowing wagers on both college sports outcomes and economic indicators like the targeted fed funds rate.
• The Massachusetts regulator has issued a subpoena to Robinhood concerning the number of users who wanted to trade contracts related to college sports.

Regulatory Concerns

Galvin has criticized Robinhood’s offerings as gimmicks to attract investors away from wise investment practices.

“This is just another gimmick from a company that’s very good at gimmicks to lure investors away from sound investing,” said Galvin.

Galvin’s office has confirmed the investigation, noting that Robinhood must respond by April 3.

Background on the Prediction Market

Robinhood’s prediction market, launched on March 17, offers contracts tied to March Madness events and forecasts of federal fund rates. Despite prior plans for a prediction market launch in February, Robinhood postponed at the CFTC’s request. A spokesperson affirmed that these markets are regulated by the CFTC and provided safely for users.