Robinhood pulls Super Bowl event contracts after CFTC intervention
Retail brokerage platform says it is “disappointed” but will adhere to regulator’s requirements ahead of planned rollout of a “comprehensive” product later this year
Robinhood has taken down its Super Bowl event contracts market after less than 24 hours following a request from the Commodity Futures Trading Commission (CFTC) to suspend the offering.
The California-based platform had introduced the product after tapping predictions market Kalshi to provide contracts for its Robinhood Derivatives arm on February 3.
However, the CFTC formally requested the firm to “not permit customers to access” sports event contracts.
Robinhood said it would suspend the full rollout of sports event contracts and continue to “work with the CFTC to understand their concerns.”
Around 1% of Robinhood Derivatives customers had had the product pushed to them. For those who have already placed trades, Robinhood said it would provide the option to close positions or take them to resolution.
Robinhood said: “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.
“[We] will continue to collaborate with the CFTC as we work to roll out a more comprehensive event contracts platform later this year.”
The written feedback relates to an August 8 letter sent to the CFTC in which Robinhood laid out concerns over a ban on event contracts.
The letter, signed by Robinhood Derivatives president JB Mackenzie, implored the US derivatives regulator to “engage in further dialogue” with futures markets participants and retail traders to “develop a more balanced and effective regulatory approach.”
“Although we recognise the CFTC’s intention to ensure the integrity of the derivatives market, we believe that the proposal is overly broad and urge the CFTC to reconsider the proposal,” Mackenzie wrote.
Robinhood’s shelving of the product comes after the CFTC handed down similar requests to Crypto.com and Kalshi, though both parties continue to offer sports event contracts on the winner of certain sports competitions.
As per Reuters, Robinhood general counsel Lucas Moskowitz said: “We are heeding their directive to cease offering these contracts despite the fact that the CFTC has not deemed Kalshi’s football championship contracts illegal.”
Yesterday, February 5, BetMGM CEO Adam Greenblatt said during an earnings call the operator was deploying a “watch and see” stance with event contracts following the explosion of the sector since October.
Interim CFTC chair Caroline D Pham, who was appointed by President Donald Trump, previously leaned in favor of allowing event contracts, while Donald Trump Jr was recently hired as a strategic adviser by Kalshi.
However, the CFTC is investigating Kalshi and Crypto.com’s new offerings and if they breach existing regulations.
At the time of writing, almost $2.8m has been traded at Kalshi on the winner of Super Bowl LIX on February 9 between the Philadelphia Eagles and the Kansas City Chiefs.