- Robinhood has ceased trading in the sports event contract markets
- The Commodity Futures Trading Commission formally requested the cessation
- Customers can either wait for the contracts to resolve or close their positions
After just a little more than a day of trading, Robinhood has officially ceased transactions of its sports event trading contracts.
Robinhood made the announcement after the CFTC formally requested the company “not permit customers to access” sports event contracts.
Robinhood opened event trading on the Super Bowl outcome on Monday.
Disappointed by Outcome
The company noted that the new event trading contracts were only rolled out to 1% of its customers. For those that did purchase contracts, the company will allow users to either close their positions or take the contracts to resolution.
In a public notice today, Robinhood representatives expressed disappointment in the CFTC’s request to cease trading on the Super Bowl outcome.
“We are disappointed by this outcome, especially given that we had been in regular communication with the CFTC about our intent and plans to offer this product. We’ve also taken steps to advocate for balanced regulation in the futures and derivatives markets, including participating directly in a CFTC roundtable, providing written feedback to the CFTC, and generally championing the economic benefits of event contracts.”
On Monday, Robinhood announced a partnership with Kalshi to allow its users to purchase event trading contracts on whether the Eagles or Chiefs will win the Super Bowl.
Robinhood was Kalshi’s first broker.
Kalshi itself filed a submission with the CFTC on Wednesday, Jan. 22, to offer “Will <team> win <title>?”contracts to its customers.
The event trading company began offering several sports contracts to its users on Jan. 23, including the winner of the Super Bowl, the NBA champion, and conference champions for the NFL and NBA.
Kalshi is still offering the following sports event trading contracts to its customers:
- Super Bowl champion
- NFL NFC champion
- NFL AFC champion
- NBA champion
- NBA Western Conference champion
- NBA Eastern Conference champion
- NHL champion
- NCAA men’s basketball champion
While Robinhood chose to honor the CFTC’s request, not all companies participating in sports event trading markets have done so.
Crypto.com received a request from the CFTC to cease sports event contract trading last month, but chose to continue offering the markets to its customers.
“We remain committed to working with the CFTC and will continue to support our customers and the trading of our sports title event contracts in all 50 states without interruption while we review the CFTC’s notification,” a company spokesperson told Sports Betting Dime.
The CFTC announced it had initiated a review on Dec. 19, 2024, for contracts offered by Crypto.com based on the winner of a league championship and the hometown that will host a championship celebration, such as a parade, for its winning team.
The CFTC announced the contracts being offered by Crypto.com may involve a prohibited commodity in CFTC Regulation 40.11(a) and section 5c(c)(5)(C) of the Commodity Exchange Act. This specifically notes that registered entities shall not list for trading or accept contracts that involve “terrorism, assassination, war, gaming, or an activity that is unlawful under any state or federal law.”
A company spokesperson disagreed with the assessment.
“It is disappointing that the current and imminently departing CFTC leadership would take this action while not allowing the incoming CFTC leadership to determine how free markets operate under its administration. The majority’s decision to apply this rule contradicts recent Federal Court rulings and conflicts with the current Commission’s own statement set forth in its recent rule proposal,” the spokesperson told Sports Betting Dime.
Robinhood, the popular investment app known for its commission-free trading, has recently announced that it will no longer be entering into contracts with sports events following a request from the Commodity Futures Trading Commission (CFTC). This decision comes after the CFTC raised concerns about the potential risks associated with Robinhood’s involvement in sports events.
The CFTC, which regulates the futures and options markets in the United States, expressed concerns that Robinhood’s sponsorship of sports events could create conflicts of interest and potentially harm investors. By sponsoring sports events, Robinhood could be seen as promoting risky trading behavior or encouraging investors to make decisions based on emotion rather than sound financial principles.
In response to the CFTC’s request, Robinhood has decided to cease entering into contracts with sports events and will instead focus on providing a transparent and user-friendly platform for its customers. This decision aligns with Robinhood’s commitment to putting the interests of its customers first and ensuring that they have access to the tools and information they need to make informed investment decisions.
While some investors may be disappointed by Robinhood’s decision to stop sponsoring sports events, it is ultimately a positive development for the company and its customers. By prioritizing transparency and investor protection, Robinhood is demonstrating its commitment to responsible investing practices and setting a positive example for other financial services companies.
In conclusion, Robinhood’s decision to stop entering into sports event contracts following a request from the CFTC is a step in the right direction for the company and its customers. By focusing on providing a transparent and user-friendly platform, Robinhood is demonstrating its commitment to responsible investing practices and ensuring that investors have access to the tools and information they need to make informed decisions.
