Robinhood said on Tuesday it is rolling back the event contracts that would let users bet on the result of the Super Bowl clash this weekend, after the online brokerage received a request from the U.S. Commodity Futures Trading Commission (CFTC).
The halt comes just a day after the launch of the product. Robinhood said it was “disappointed by the outcome.”
“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,” said Lucas Moskowitz, Robinhood’s general counsel.
Representatives for Kalshi and the CFTC did not immediately respond to Reuters’ requests for comment.
The products would have allowed the company to tap into the betting mania around one of the most iconic sporting events in the country, as Robinhood looks to expand into segments that are gaining traction with retail investors.
The company had rolled out the contracts to 1% of its customers. Those who already placed the trades will get the option to close their positions or take them to resolution, Robinhood said.
Event derivatives trading involves buying and selling contracts that let traders speculate on the outcomes of specific events, including elections, economic data releases and policy decisions.
“Prediction markets and event contracts can be subject to complex regulatory landscapes,” said Michael Ashley Schulman, partner and chief investment officer at Running Point Capital Advisors.
“The CFTC may be concerned that this could be perceived as an active retail betting platform disguised under an investment umbrella, especially since sporting events are much more frequent than presidential elections.”
These products have enjoyed a warm reception, despite being relatively new and widely seen as high-risk, especially after a U.S. court struck down the CFTC’s efforts to block KalshiEX’s election betting contracts.
Robinhood’s derivatives arm is planning to launch a “more comprehensive” event contracts platform later this year.
—Niket Nishant and Manya Saini, Reuters
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