- Robinhood Derivatives halted its Super Bowl betting product just one day after its launch.
- The suspension followed a request from the Commodities and Futures Trading Commission (CFTC) to stop offering event contracts tied to the game.
The product, launched in partnership with prediction market Kalshi, allowed users to wager on the outcome of the Super Bowl matchup between the Philadelphia Eagles and Kansas City Chiefs. However, Robinhood announced on February 4 on X, that it would suspend the rollout after discussions with the CFTC.
The firm revealed that the product had already been made available to 1% of its customers, some of whom had placed trades. Those who had already placed bets will be able to either close their positions or see them through to settlement, but no new trades will be allowed. Robinhood expressed disappointment, stating it had been in constant communication with the CFTC about its plans.
CFTC Concerns and Broader Implications
The suspension comes amid reports that the CFTC is investigating Crypto.com and Kalshi over their Super Bowl event contracts. The regulator is examining whether these offerings comply with derivatives regulations. Event contracts differ from conventional sports betting, as the odds are determined by users pooling their predictions rather than being set by a bookmaker. This innovative approach has drawn regulatory scrutiny, particularly as prediction markets expand into new areas.
Despite the probe, Crypto.com has stated it will continue offering Super Bowl wagers. “We firmly believe in the legality of our events contracts and believe the CFTC is the appropriate regulator,” a company spokesperson affirmed. Likewise, Kalshi remains undeterred by ongoing investigations and continues to offer Super Bowl wagers. Kalshi’s “Kansas City vs. Philadelphia Football” Super Bowl market, launched on Jan. 24, has generated over $2.4 million in trading volume, highlighting the growing interest in event-based wagering.
Robinhood’s suspension marks a setback for its event contracts business, which began in October with trades based on the outcome of the U.S. presidential election. That launch followed a court victory by Kalshi, which secured approval to offer election-based contracts to U.S. users. The situation highlights the challenges of introducing present-day financial products in a heavily regulated industry.
Robinhood’s recent actions indicate there ought to be a balance between innovation and compliance with regulators. While event contracts offer a unique way for users to engage with real-world outcomes, regulators remain cautious about their potential risks and implications.
As Robinhood and other platforms navigate these hurdles, the future of event contracts remains uncertain. The CFTC’s actions show they are paying closer attention to prediction markets, which could change how these markets work in the U.S. For now, Robinhood’s Super Bowl betting issue is a warning for companies trying to innovate in finance.