Robinhood Under Investigation for March Madness Betting Feature

Is Robinhood Letting Users Gamble on March Madness?

Massachusetts regulators are investigating Robinhood after the company launched a new feature that let users bet on March Madness basketball outcomes. The state’s securities division issued a subpoena asking how many people used this feature and why it launched despite previous regulatory warnings.

What Is Robinhood’s New Prediction Market Feature?

Robinhood launched a “prediction markets hub” in March through a partnership with Kalshi, a CFTC-regulated exchange. This allows users to buy contracts on real-world events—like who will win the NCAA tournament or which team reaches the Final Four.

Each contract is binary: you buy “Yes” or “No” based on the expected outcome. Prices change with demand, similar to how stocks or options trade. However, Massachusetts officials believe Robinhood is acting more like a sportsbook than a trading app.

Is This Considered Gambling or Investing?

Robinhood says it’s not gambling. The contracts are traded through Kalshi, which is regulated by the Commodity Futures Trading Commission (CFTC). That gives them legal cover as “event contracts,” not wagers. But to many users, the experience feels similar to placing a bet at an online casino—just wrapped in trading language.

But Massachusetts officials disagree. Secretary of State Bill Galvin called it “an inappropriate mix of investing and gambling,” especially given Robinhood’s appeal to young, inexperienced users.

Why Did Robinhood Launch March Madness Predictions?

March Madness is one of the most popular betting events in the U.S. Robinhood timed the launch to align with high user interest. The goal: drive engagement, trading activity, and broaden the app’s appeal beyond stocks and crypto.

The company is clearly targeting younger users who already view March Madness as a major betting event.

Has Robinhood Offered Sports Betting Before?

Yes. Robinhood previously offered prediction contracts tied to the Super Bowl earlier this year. But after pushback from the CFTC, the company pulled those contracts. The March Madness rollout is a second attempt, and this time, it’s triggered a formal investigation.

Galvin’s office wants internal documents showing who approved the launch, along with user data tied to the betting behavior.

Robinhood is pushing into new areas to grow its business, but regulators are watching closely—especially when speculation starts looking like sports betting.