Robinhood's March Madness Streak
Securities trading platform, Robinhood, counters CFTC by introducing a Prediction Market Hub, featuring March Madness contests
Robinhood just can't seem to stay out of the game, huh?
This time, they're daring to take on the mighty Commodity Futures Trading Commission (CFTC) yet again!
Remember when they tried to sneak in some Super Bowl LIX betting markets back in February, only to have the CFTC kick 'em to the curb? Well, they're back for another round with their March Madness markets!
Vlad Tenev, Robinhood's Bulgarian-American CEO, announced the launch of a prediction markets hub on the Robinhood app on Monday. According to Robinhood, this hub will let users trade contracts for multiple events — ahem, that's right, we're talking about this year's men and women's NCAA basketball tournaments!
With the CFTC's swift intervention to squash their Super Bowl markets, it's a wonder if Tenev's March Madness market will pass muster with the Feds.
Another Round for Robinhood
Robinhood hyped up their event contracts for Super Bowl LIX, but the CFTC wasn't having it, instructing the firm to halt its offerings a day later. But Monday's announcement tells us the Super Bowl wasn't Robinhood's last dance in the sports world.
Robinhood's press release reveals that contracts via the new hub, including March Madness, will start rolling out today and be made available to all eligible customers in the coming days. According to Reuters, however, Robinhood has allegedly been in contact with the CFTC in recent weeks, intending to work with the federal derivatives trading body to "promote innovation in the futures, derivatives and crypto markets."
JB Mackenzie, Robinhood's Vice President and General Manager of Futures and International, expressed his excitement about giving customers novel ways to use prediction markets. He's looking forward to bringing these markets to US customers "in compliance with existing regulations."
The State of Play
The launch of the hub lets Robinhood customers bet on event outcomes that have a bigger chance of passing CFTC censure, such as the expected upper limit of the Federal Reserve funds rate in May. Reports indicate that Robinhood's prediction markets hub and tied-in contracts will be available nationwide via a partnership with Kalshi.
Sports regulatory journalist Robert Linnehan states that Robinhood users can buy contracts for all upcoming NCAA matchups, "including the championship, and will receive $1 for every correct contract they own." Whatever the CFTC's response, it looks like Robinhood is ready for a long-term battle driven by their faith in the power of prediction markets.
The Skinny on Robinhood's Prediction Markets
Robinhood's March Madness prediction markets are structured under the CFTC's regulatory framework via its partnership with Kalshi, a CFTC-regulated designated contract market (DCM), adhering to futures, swaps, and prediction market regulation requirements. While this regulatory alignment positions them well to comply with federal regulators, state-level gambling laws may still pose challenges.
In the past, Robinhood has been forced to pause problematic markets, such as Super Bowl bets, due to state gaming laws, acknowledging the ongoing debate about the line between federally regulated futures contracts and state-regulated gaming.
Robinhood's strategic approach—adhering to CFTC regulations and working within the framework—likely satisfies federal regulators, but still requires careful management of state legality and consumer protection concerns.
It's gonna be a wild ride, folks! Keep your eyes on Robinhood as they duke it out with the CFTC on this round of March Madness prediction markets. These stocks, er, contracts are hotting up, and we can't wait to see what happens next!
Finance and technology have combined forces again in the sports world, as Robinhood launches a prediction markets hub on its app, allowing users to trade contracts for various events, including March Madness. Despite previous run-ins with the Commodity Futures Trading Commission (CFTC), Robinhood has been working closely with the federal derivatives trading body to ensure compliance with regulations.
