Robinhood faces Massachusetts probe over prediction markets

Massachusetts regulators have launched an investigation into Robinhood’s new prediction markets hub, which allows users to bet on events like March Madness matchups and federal interest rates.

The probe, led by Secretary of State Bill Galvin, seeks details about user activity and marketing materials tied to the platform’s event contracts.

Robinhood’s prediction markets hub, powered by CFTC-regulated Kalshi, launched on March 17 with contracts linked to college basketball tournaments and the Federal Reserve’s May target rate.

The platform delayed a similar Super Bowl-related launch in February after CFTC concerns.

Galvin’s office issued a subpoena demanding data on Massachusetts users participating in sports-related contracts and copies of promotional materials.

The regulator criticised the feature as a “gimmick” to lure investors away from traditional strategies.

Robinhood maintains the contracts are “regulated by the CFTC and offered through CFTC-registered entities,” emphasising compliance with federal oversight.

The company must respond to the subpoena by April 3/

The investigation highlights ongoing tensions between state regulators and fintech platforms expanding into novel financial products.

While Robinhood positions prediction markets as a regulated offering, Massachusetts authorities are scrutinising their alignment with consumer protection standards.

Shares of Robinhood rose 8.1% to $47.96 following news of the probe, reflecting mixed market reactions to regulatory developments.

The case underscores broader debates about innovation versus oversight in digital finance ecosystems.