Massachusetts’ securities regulator has reportedly launched a probe over Robinhood’s prediction markets providing that has allowed customers to wager on the outcomes for a slew of occasions, together with basketball tournaments.
Reuters reported on March 24 that Massachusetts Secretary of State Invoice Galvin mentioned his workplace subpoenaed Robinhood final week to get info on its advertising supplies and the variety of Massachusetts-based customers that traded sports activities events contracts on faculty basketball tournaments.
Galvin mentioned he was involved the buying and selling platform was “linking a playing occasion on a well-liked sports activities occasion that’s particularly standard to younger individuals to a brokerage account.”
“That is simply one other gimmick from an organization that’s excellent at gimmicks to lure buyers away from sound investing,” he added.
Robinhood launched a prediction markets hub on March 17 that might be initially accessible via the Commodity Futures Buying and selling Fee-regulated prediction platform Kalshi and would function occasion contracts on faculty basketball tournaments and the Might federal funds fee.
A Robinhood spokesperson advised Cointelegraph that the occasion contracts “are regulated by the CFTC and supplied via CFTC-registered entities.”
“Prediction markets have turn out to be more and more related for retail and institutional buyers alike, and we’re proud to be one of many first platforms to supply these merchandise to retail prospects in a protected and controlled method,” the spokesperson mentioned.
Robinhood Markets (HOOD) share value remained comparatively flat after the shut of buying and selling on March 24 after an over 9% leap over the day to shut at $48.36, according to Google Finance.
Robinhood is up practically 30% thus far this 12 months however has fallen from its Feb. 14 all-time peak of $65.28. Supply: Google Finance
The CFTC and Galvin’s workplace didn’t instantly reply to requests for remark.
Occasion contracts are agreements that permit customers to wager on the result of basically something, from sports activities video games to election outcomes and the value of cryptocurrencies.
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They have been popularized on the blockchain-based prediction market Polymarket and non-decentralized rival Kalshi and have caught the ire of some regulators.
Final month, Robinhood scrapped occasion contracts permitting for bets on the Tremendous Bowl a day after launching the merchandise after the CFTC asked it to.
The Massachusetts probe additionally requested Robinhood hand over inner communications in regards to the determination to roll out the current faculty basketball occasions contracts after the CFTC’s request to cease the Tremendous Bowl contracts.
The CFTC additionally reportedly asked Kalshi and Crypto.com early final month to clarify how each of their Tremendous Bowl occasion contracts complied with derivatives laws.
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