Massachusetts securities regulators are investigating whether or not a serious inventory buying and selling app crossed the road into unlawful playing.
Robinhood lately launched a predictions-market product that permits customers to make predictions on a broad menu of occasions, together with the March Madness basketball event. Massachusetts Secretary of State Bill Galvin is worried that the corporate could have linked sports activities betting to investing customers.
“This is just another gimmick from a company that’s very good at gimmicks to lure investors away from sound investing,” Galvin advised Reuters.
Galvin was additionally involved concerning the firm “linking a gambling event on a popular sports event that’s especially popular to young people to a brokerage account.”
The Robinhood choices are often called “event contracts” and permit merchants “to bet on specific outcomes, offering opportunities to profit from predictions on everything from sports and entertainment to politics and the economy,” Reuters notes.
Company Claims Compliance At A Federal Level
The occasion contracts have develop into standard, however some within the trade consider they’re extra akin to sports activities betting. Regulators within the Bay State subpoenaed Robinhood for details about its buying and selling choices associated to school basketball, together with advertising supplies and a listing of customers within the state who’ve engaged in buying and selling on sports activities occasions.
Robinhood has responded that the corporate’s occasion contracts are regulated by the U.S. Commodity Futures Trading Commission. The basketball choices had been unveiled a month after suspending a deliberate providing on the Super Bowl on the urging of the CFTC. The firm mentioned it had been in touch with the regulatory physique earlier than launching the prediction market choices.
“Prediction markets have become increasingly relevant for retail and institutional investors alike, and we’re proud to be one of the first platforms to offer these products to retail customers in a safe and regulated manner,” a Robinhood spokesperson mentioned.
The buying and selling choices come at a time when the NCAA has inspired states to make school prop bets unlawful and a few lawmakers have moved to manage sports activities betting on the federal degree.
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