Robinhood Faces Massachusetts Probe Over New In-App Prediction Markets

Massachusetts’ top securities regulator has launched an investigation into Robinhood following the trading app's recent introduction of a prediction markets hub. The feature allows users to bet on real-world outcomes, such as March Madness results and economic indicators.

According to a Reuters report, Massachusetts Secretary of State Bill Galvin issued a subpoena to Robinhood last week. The regulator is requesting data on how many Massachusetts-based users are trading event contracts, especially related to college sports, and has asked for the company’s related marketing materials. Galvin criticized the feature as a “gimmick” aimed at distracting users from more traditional investment strategies. His office confirmed to CoinDesk that Robinhood must respond to the subpoena by April 3.

Robinhood’s prediction market, launched on March 17, is powered by Kalshi, a platform regulated by the Commodity Futures Trading Commission (CFTC). Contracts include predictions on March Madness and future interest rate decisions. A Robinhood spokesperson emphasized the offering is fully compliant with CFTC regulations and operated through registered entities. The company says it aims to bring safe and regulated access to event-based contracts for both retail and institutional investors.

This isn’t the first time Robinhood has drawn scrutiny over its product launches. The firm initially planned to debut its prediction market in February, ahead of the Super Bowl, but delayed it at the CFTC’s request.

The probe marks another regulatory challenge for Robinhood, which has faced criticism in the past for its gamified trading features. With prediction markets gaining popularity, particularly in the crypto and retail finance sectors, Robinhood’s move could signal a broader shift—but not without attracting the attention of watchdogs.