Massachusetts gaming regulators are investigating trading platform Robinhood for potentially letting users bet on the NCAA Men's Basketball Tournament using prediction markets. Secretary of the Commonwealth of Massachusetts Bill Galvin subpoenaed Robinhood on March 20 following the company’s decision to launch prediction markets, as first reported by Reuters. The hub launched March 17 and offered users a way to gamble on everything from weather to political developments to who would win March Madness. Prediction markets circumvent the need for standard sports betting licensing. Putting a halt on operations Galvin said that he believes that Robinhood offered prediction markets to appeal to younger audiences who are more inclined to gamble their money. “This is just another gimmick from a company that’s very good at gimmicks to lure investors away from sound investing,” Galvin said in an interview with Reuters. Prediction markets work by allowing users to purchase and trade contracts that designate a certain outcome of an event, whether that be one team to beat another in the NCAA tournament or a team to win March Madness as a whole. A Robinhood spokesperson said its prediction markets are regulated by the Commodity Futures Trading Commission (CFTC) and offered on other CFTC-regulated platforms. “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 statement from the company read. Prediction markets are funneled through Kalshi, an exchange platform for prediction markets. The secretary’s office set an April 3 deadline to obtain more information about Massachusetts residents’ opinions on college sports betting and Robinhood’s internal communication regarding the launch of prediction markets. Robinhood’s history with regulators Galvin has a history with Robinhood. In 2024, complaints about the company’s operations he levied in 2020 and 2021 led to a $7.5 million settlement. Robinhood recently abandoned its plans to allow Super Bowl betting at the request of the CFTC, while Kalshi has been under fire in recent months for its political betting markets. Robinhood was not given the same request by the CFTC for March Madness. Legal Sports Report outlined how Robinhood had unveiled its Super Bowl betting market to about 1 percent of its users when it received the CFTC’s request. Anyone with outstanding contracts was given the option to receive a refund or see their bets through to the finish line. “That review of the company’s risk management procedures and controls applicable to sports-related event contracts has completed, and at this time, the CFTC has no legal justification to prevent Robinhood from offering access to these contracts, which are listed on a CFTC-registered exchange,” a CFTC spokesperson said in a March 24 statement. Massachusetts licensed seven online sportsbooks for operation, including Bally Bet, BetMGM, Caesars, DraftKings, ESPN Bet, Fanatics, and FanDuel. It has also been on the front line for market regulation, having sent cease and desist orders to offshore sportsbook operators such as Bovada last October.