FinTech News
Robinhood Pulls Sports Event Contract Feature Due to CFTC
After announcing that customers would be able to purchase event contracts tied to the outcome of the “Pro Football Championship,” Robinhood has abruptly reversed course.
What’s happening:
Earlier this week, Robinhood revealed that approved users would be able to purchase event contracts centered around what they called the “Pro Football Championship” (known to most as the Super Bowl). With this feature, customers could buy contracts that would pay out if Kansas City won or ones that paid upon a Philadelphia victory. However, the platform has now pulled the plug on those plans at the behest of the Commodity Futures Trading Commission (CFTC).
As Robinhood details in a blog post, the company was contacted by the CFTC and asked to “not permit customers to access” to sports event contracts. In turn, the app has suspended the rollout of the feature. According to Robinhood, the ability to purchase these contracts had only been made available to approximately 1% of customers at the time. They advised that those users who had already purchased contracts will be given the option to close their position or hold the contract through to resolution.
The proposed introduction of the Championship contracts comes a few months after Robinhood’s first foray into event contract trading with the 2024 United States presidential election. Elsewhere, the app has recently introduced support for index options and futures trading.
What they’re saying:
Writing in a blog post on their site, Robinhood stated, “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.”
They added, “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.”
My thoughts:
If asked which I thought was the more concerning event to allow people to effectively bet on — the Super Bowl or the election — I’d have to say the latter. Yet, that Robinhood experiment seemed to go off without a hitch, while the CFTC has taken a stand against this proposed KC vs. PHI matter. I’m sure they have their reasons but it does seem a bit odd to me.
Of course, I also need to mention that this isn’t the first time Robinhood has announced a feature only to be rebuffed by regulators. Famously, the company announced a Checking & Savings account — which was later dumbed down and rebranded as Cash Management (it’s since undergone several revamps after that).
In any case, while I would have put a few dollars on my local Chiefs using these contracts, I’m not too heartbroken that this option won’t be made available to me (although sports betting apps still exist if I really wanted). That said, I am interested to see how this fight over event contracts and the CFTC progresses going forward.
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