Massachusetts Investigates Robinhood's Controversial Prediction Markets

Massachusetts securities regulator launches an investigation into Robinhood's decision to offer prediction markets, allowing bets on events like March Madness. Concerns arise over potential gambling links to brokerage accounts. The inquiry, led by Secretary of State Bill Galvin, seeks detailed information and aims to ensure regulatory compliance.

Massachusetts is taking a closer look at Robinhood's new venture into prediction markets, a platform that lets users place wagers on various events, including the March Madness college basketball tournaments.

Secretary of State Bill Galvin expressed concern about the potential dangers of linking gambling-like elements to brokerage accounts, particularly for younger investors. Galvin has subpoenaed Robinhood for information about the number of Massachusetts users involved in college sports event trading.

While Robinhood claims the prediction markets are regulated by the CFTC, Galvin's office remains skeptical and is investigating the company's internal decision-making, particularly after Robinhood previously withdrew similar offerings under CFTC request.

(With inputs from agencies.)