Massachusetts Regulators Are Investigating Robinhood Over The App’s New ‘Predictions Hub’
Please note that we are not authorised to provide any investment advice. The content on this page is for information purposes only.
The regulators of the US state of Massachusetts have launched an investigation into Robinhood, a popular trading app that recently announced a so-called ‘Predictions Hub.’
The Predictions Hub is a feature that allows users to bet on the outcomes of various events, and the state’s authorities believe it could have been designed to lure traders away from sound investing. This is a concern of the Secretary of the Commonwealth of Massachusetts, Bill Galvin, who was the one to send a subpoena to Robinhood.
Galvin called it “just another gimmick from a company that is very good at gimmicks to lure investors away from sound investing.” He demanded that Robinhood hands over copies of marketing materials, as well as details on how many brokerage account users in the state of Massachusetts have requested to trade college sports events contracts.
Among numerous things that users are being allowed to bet on is the March Madness college basketball games.
Robinhood Claims Its Offering Is Safe And Regulated
In its own statement, Robinhood noted that event contracts are regulated by the CFTC in the United States. In fact, they are offered already through CFTC-registered entities, specifically KalshiEX.
One report published by CNN says that the trading firm launched its predictions hub only a few weeks after the CFTC told it to scrap plans to allow users to place bets on the outcome of the Super Bowl.
However, in its statement, the firm said that the predictions market is growing and that it has become increasingly relevant for both institutional and retail investors alike. With that being the case, Robinhood is proud to be among the first platforms to offer these products to retail users, saying that its offering is safe and regulated.
Despite this, the company will now seemingly end up in a tussle with Galvin, and not for the first time. Back in 2024, Robinhood settled with the local government by agreeing to pay a $7.5 million fine. This was the resolution of a case from 2020, which accused the trading app of using gamification to encourage constant use of its service, which the authorities seemingly considered a form of deception.
