Robinhood (Nasdaq: HOOD) has suspended offering Super Bowl event contracts only a day after listing them, following a request from the Commodity Futures Trading Commission (CFTC).
Event Contracts Are Not Allowed
In a statement published yesterday (Tuesday), the trading platform revealed that the US regulator had formally requested that Robinhood Derivatives, which offers such contracts, must “not permit customers to access” sports event contracts.
Robinhood has about 24.3 million customers globally. However, according to the firm, it rolled out the Super Bowl event contracts to only 1 per cent of its customers. Traders who have already placed orders can either close their positions or settle them.
“While we continue to work with the CFTC to understand their concerns, we are suspending the rollout of the Pro Football Championship market,” Robinhood noted in its official announcement, adding: “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.”
Event contracts allow traders to take a binary bet on the outcome of an event, in this case, the National Football League’s Super Bowl championship between the Philadelphia Eagles and the Kansas City Chiefs. These contracts resemble the notorious binary options, which are now banned in most jurisdictions.
The US already has a massive sports betting market, governed by gambling rules. However, sports event contracts are seen as financial derivatives.
The Most Watched Event in the US
The Super Bowl is also the top event in the United States in terms of viewership. This year, it is estimated to attract between 100 million and 150 million viewers globally, according to Forbes. With such popularity, many sponsors pay tens of millions of dollars for seconds of advertisements during the event’s broadcast.
Meanwhile, Robinhood is not the only platform against which the CFTC has taken action over its offering of event contracts. The regulator recently opened a probe into Crypto.com and Kalshi for their joint offering of Super Bowl event contracts. Cointelegraph pointed out that Crypto.com will continue offering event contracts despite the probe.
Interestingly, the CFTC lost its court battle with Kalshi last year over its offering of political event contracts, which allowed multiple US platforms to offer event contracts on the outcome of US Presidential elections. However, the regulator appealed against the court’s decision.
“[Robinhood] will continue to collaborate with the CFTC as we work to roll out a more comprehensive event contracts platform later this year,” Robinhood added in its announcement.
Robinhood (Nasdaq: HOOD) has suspended offering Super Bowl event contracts only a day after listing them, following a request from the Commodity Futures Trading Commission (CFTC).
Event Contracts Are Not Allowed
In a statement published yesterday (Tuesday), the trading platform revealed that the US regulator had formally requested that Robinhood Derivatives, which offers such contracts, must “not permit customers to access” sports event contracts.
Robinhood has about 24.3 million customers globally. However, according to the firm, it rolled out the Super Bowl event contracts to only 1 per cent of its customers. Traders who have already placed orders can either close their positions or settle them.
“While we continue to work with the CFTC to understand their concerns, we are suspending the rollout of the Pro Football Championship market,” Robinhood noted in its official announcement, adding: “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.”
Event contracts allow traders to take a binary bet on the outcome of an event, in this case, the National Football League’s Super Bowl championship between the Philadelphia Eagles and the Kansas City Chiefs. These contracts resemble the notorious binary options, which are now banned in most jurisdictions.
The US already has a massive sports betting market, governed by gambling rules. However, sports event contracts are seen as financial derivatives.
The Most Watched Event in the US
The Super Bowl is also the top event in the United States in terms of viewership. This year, it is estimated to attract between 100 million and 150 million viewers globally, according to Forbes. With such popularity, many sponsors pay tens of millions of dollars for seconds of advertisements during the event’s broadcast.
Meanwhile, Robinhood is not the only platform against which the CFTC has taken action over its offering of event contracts. The regulator recently opened a probe into Crypto.com and Kalshi for their joint offering of Super Bowl event contracts. Cointelegraph pointed out that Crypto.com will continue offering event contracts despite the probe.
Interestingly, the CFTC lost its court battle with Kalshi last year over its offering of political event contracts, which allowed multiple US platforms to offer event contracts on the outcome of US Presidential elections. However, the regulator appealed against the court’s decision.
“[Robinhood] will continue to collaborate with the CFTC as we work to roll out a more comprehensive event contracts platform later this year,” Robinhood added in its announcement.
This post is originally published on FINANCEMAGNATES.
