Massachusetts Regulator Probes Robinhood Over Prediction Markets Offering

Massachusetts securities regulators have launched an investigation into Robinhood’s newly introduced prediction markets, which allow users to place bets on various real-world events—including college basketball tournaments.

According to a March 24 report by Reuters, Massachusetts Secretary of State Bill Galvin confirmed that his office issued a subpoena to Robinhood last week.

The subpoena requests details on the platform’s marketing strategies and the number of Massachusetts-based users participating in event contract trading related to college basketball.

Robinhood’s Sports Bets Risk Turning Investing Into Gambling

Galvin voiced concerns that Robinhood is blurring the line between investing and gambling, particularly by connecting sports betting—popular among younger demographics—to brokerage services.

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

Robinhood launched its prediction markets feature on March 17 through a partnership with Kalshi, a platform regulated by the Commodity Futures Trading Commission (CFTC).

The feature allows users to speculate on the outcomes of specific events, such as sports results or economic indicators like the federal funds rate.

Event contracts, which have been gaining traction on platforms like Kalshi and the blockchain-based Polymarket, have drawn scrutiny from regulators.

These contracts let users bet on a wide range of outcomes, raising questions about whether they should be classified—and regulated—as derivatives.

“Massachusetts Secretary of State Bill Galvin said he was concerned that Robinhood was "linking a gambling event on a popular sports event that's especially popular to young people to a brokerage account." $HOOD pic.twitter.com/GLFDqWX0Su

— Jevgenijs Kazanins (@jevgenijs) March 24, 2025

This isn’t the first time Robinhood’s event contracts have faced regulatory pressure.

Just last month, the platform was asked by the CFTC to remove Super Bowl betting contracts, which it did within a day of their launch.

The Massachusetts probe is also seeking Robinhood’s internal communications about its decision to proceed with college basketball-related contracts shortly after the CFTC’s intervention on Super Bowl offerings.

SEC Drops Robinhood Crypto Probe Without Enforcement Action

Last month, Robinhood Crypto revealed that the U.S. Securities and Exchange Commission (SEC) has officially closed its investigation into the platform without taking any enforcement action.

The probe, which began last spring over concerns about potential unregistered securities sales, ended on February 21.

In another development, Robinhood Markets is set to expand its cryptocurrency services into Singapore by 2025, leveraging its recent acquisition of Bitstamp Ltd., a European digital-assets exchange.

The move will be guided by local regulatory frameworks, with Robinhood aiming for a late 2025 launch, according to Johann Kerbrat, vice president and general manager of Robinhood Crypto.

Robinhood’s expansion comes amid a crypto market resurgence, driven in part by U.S. President Donald Trump’s pro-crypto policies.

The company reported fourth-quarter 2024 revenues exceeding $1 billion, surpassing Wall Street estimates of $940.8 million.