Robinhood halts Super Bowl event contracts following CFTC request, while political event contracts remain under consideration.
Robinhood halts Super Bowl event contracts following CFTC request, while political event contracts remain under consideration.
Robinhood halts Super Bowl event contracts following CFTC request, while political event contracts remain under consideration.
Key Points:
Robinhood (Nasdaq: HOOD) has suspended its offering of Super Bowl event contracts just one day after launching them. The decision follows a formal request from the Commodity Futures Trading Commission (CFTC), which asked Robinhood Derivatives to cease offering the controversial contracts linked to the NFL’s championship game.
In a statement released Tuesday, Robinhood revealed that the CFTC had specifically instructed its derivatives division to “not permit customers to access” sports-related event contracts. The company had initially rolled out these contracts to only 1% of its customer base, totaling 24.3 million worldwide.
Robinhood now allows customers who had already placed orders to close or settle their positions. Robinhood expressed disappointment over the suspension, emphasizing that the company had regularly communicated with the CFTC before launching the product.
“While we continue to work with the CFTC to understand their concerns, we are suspending the Pro Football Championship market rollout,” Robinhood noted in its official announcement. “We are disappointed by this outcome, especially given that we had regularly communicated with the CFTC about our intent and plans to offer this product.”
Even contracts are binary options trading, allowing customers to place bets on the outcome of specific events—in this case, the Super Bowl showdown between the Philadelphia Eagles and the Kansas City Chiefs. These contracts allow traders to predict the game’s winner, with the contract’s value determined by the result.
However, regulators scrutinize event contracts because they share similarities with binary options, which many jurisdictions have banned due to concerns over their speculative nature and the risk of investor harm. While the US already has a large sports betting market, these event contracts are treated as financial derivatives, falling outside the scope of traditional gambling regulations.
The Super Bowl is one of the most-watched events in the United States, with estimates suggesting that between 100 million and 150 million people will tune in globally this year. As a result, the event garners significant advertising revenue, with sponsors paying millions for short ad slots during the broadcast.
Despite the ongoing popularity of sports betting in the country, the CFTC’s action highlights the growing tension between financial regulators and platforms offering event contracts. Robinhood is not the only platform facing regulatory scrutiny over these products. The CFTC is investigating Crypto.com and Kalshi for offering similar Super Bowl event contracts. However, unlike Robinhood, Crypto.com plans to continue offering these contracts despite the probe.
Interestingly, the CFTC has had a mixed track record in its enforcement actions related to event contracts. Last year, the agency lost a court battle with Kalshi over political event contracts, which allowed traders to bet on the outcomes of US presidential elections. The CFTC’s appeal against the court’s ruling is still ongoing.
While sports betting remains a point of contention, political event contracts continue to find traction. Robinhood’s announcement mentions that Robinhood’s company is still working with the CFTC to develop a broader event contracts platform, which will launch later this year.
“We will continue to collaborate” with the CFTC as we work to roll out a more comprehensive event contracts platform later this year,” Robinhood stated, hinting that “political bets—unlike those on sporting events—may still have a future on its platform.
As the landscape for event contracts evolves, the CFTC’s regulatory stance will continue to shape the future of these high-stakes, high-visibility offerings. For now, sports fans will have to look elsewhere if they want to wager on the outcome of the biggest game in American football.
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