Trading platform Robinhood is under the microscope in Massachusetts for offering event-related contracts on March Madness.
The state’s securities regulator is investigating the company over its prediction offering, with Massachusetts Secretary of State Bill Galvin voicing his concerns to Reuters regarding “linking a gambling event on a popular sports event that’s especially popular to young people to a brokerage account.”
He labeled the prediction markets a “gimmick,” and he wasn’t flattering in his comments about Robinhood in general, saying that it was attempting to lure investors away from sound investing.
sent a subpoena to Robinhood last week requesting information
Galvin is one of the more outspoken state securities regulators in the country and his office sent a subpoena to Robinhood last week requesting information about the number of accounts that are now engaging in sports-related contract trades for college sports.
In response to the probe, Robinhood sent a statement to Reuters that prediction markets are becoming more popular for both retail and institutional investors, and it’s proud to offer these products. It is working with the Commodity Futures Trading Commission (CFTC) to ensure that everything is above board.