Robinhood Markets has discontinued its Super Bowl betting product, which had been handed out to a limited number of users, following a request from the CFTC to do so.
The tool, developed in collaboration with prediction market platform Kalshi, allows users to wager on the outcome of the forthcoming Super Bowl. However, the CFTC highlighted concerns about compliance, causing Robinhood to halt further expansion while conversations with regulators are ongoing.
Only about 1% of Robinhood’s users had access to the betting option prior to its halt. Some of these consumers had already made bets, and the business is now working to resolve the transactions. Robinhood expressed disappointment with the situation, stating that it has been in regular touch with the CFTC regarding its plans.
This development comes after reports that the CFTC is also looking into similar event-based contracts offered by Crypto.com and Kalshi to see if they comply with existing derivatives regulations. Unlike traditional sports betting, event contracts are designed around user-generated odds rather than those provided by a bookmaker.
Robinhood has been expanding into event-driven financial products, having previously introduced contracts dependent on the outcome of the United States presidential election. This followed Kalshi’s legal triumph, which cleared the door for event-driven trading in some markets. The company remains dedicated to investigating event-based contracts while adhering to regulatory regulations.
As regulatory scrutiny of these financial instruments grows, the future of event-based contracts is dubious. Robinhood and other platforms that offer such products would most certainly have to traverse changing regulatory and compliance landscapes in order to be viable in the market.
