Massachusetts Probes Robinhood Over Prediction Markets Launch

Subpoena Details and State Concerns

Robinhood lets users bet on event outcomes, such as NCAA March Madness basketball games, through futures contracts. The subpoena demands data on how many Massachusetts residents applied to wager on college sports via the hub. It also seeks copies of Robinhood’s marketing materials and internal communications about the platform’s rollout. The company has until April 3 to respond.

Galvin raised specific issues. He called the product a “gimmick” that might pull investors away from sound financial choices. He worries it blurs the line between investing and sports betting, especially for younger users. The state wants to check if this setup risks misleading people about the nature of these trades.

Galvin also flagged potential harm to young investors, a group he sees as vulnerable to flashy offerings. This isn’t Robinhood’s first brush with Massachusetts; in January 2024, it paid $7.5 million to settle earlier complaints from 2020 and 2021 over its practices.

The probe ties to a broader context. Robinhood debuted its prediction markets hub on March 17, 2025, across 49 states. It followed talks with the Commodity Futures Trading Commission (CFTC), which regulates futures nationally. A month earlier, the firm scrapped Super Bowl contracts after CFTC pushback.

Now, Massachusetts questions if the March Madness bets align with state gambling laws, even under federal oversight. The subpoena reflects a push to dig into user engagement and the firm’s intent behind this move.

Background and Regulatory Friction

Robinhood’s platform lets users trade contracts tied to events, from college hoops to Federal Reserve rate calls. Contracts pay out based on yes-or-no outcomes, like a team winning a game. Launched after CFTC clearance, it hit 49 states but sparked state-level scrutiny.

Massachusetts isn’t alone; Nevada sent a cease-and-desist letter to Kalshi, a prediction markets firm powering Robinhood’s hub, over similar concerns. Galvin’s team wants to see if this crosses into state-regulated betting territory, despite CFTC jurisdiction.

The state’s history with Robinhood adds weight. In 2020 and 2021, Galvin’s office hit the firm with complaints over gamified trading features, like confetti animations for trades. That led to the $7.5 million settlement in 2024 for misleading investors and lax oversight.

Now, the prediction markets hub raises fresh flags. Galvin sees it as another hook to keep users active, possibly at the cost of financial discipline. The subpoena’s request for internal emails hints at digging for intent, especially after the Super Bowl pullback.