Robinhood resumed offering sports event futures contracts this week because it received assurance it wouldn’t suffer a repeat of last month’s embarrassing flameout.
The financial technology company rolled out its sports prediction market ahead of the 2025 Super Bowl only to withdraw the contracts from the public after just one day. That removal occurred because the Commodity Futures Trading Commission (CFTC) had not yet completed the standard risk management assessment it conducts for retail brokerages introducing novel products, a CFTC official said in a phone call Tuesday.
Now that Robinhood has cleared the check, the CFTC “has no legal justification to prevent Robinhood from offering access to these contracts,” said the official, who read a prepared statement on the call.
In other words, Robinhood re-activated its sports futures contracts knowing it no longer faces imminent federal regulatory danger. The specific reasoning for its takedown and restart has not been previously reported.
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With President Donald Trump’s son Donald Trump Jr. an advisor to Kalshi, the exchange Robinhood uses to execute event futures trades, and Kalshi board member Brian Quintenz recently nominated to lead the CFTC, Robinhood has reason to feel safe that the agency will maintain its hands-off approach.
The company’s second go at sports comes with the men’s and women’s NCAA Tournaments beginning this week. Robinhood is prominently advertising its March Madness capabilities in the Apple App Store under a slide titled “Trade your Bracket.”
Investors are intrigued that a platform with access to more than 20 million customers is able to enter a sector compared to sports betting without the state regulatory hassle or taxation. Robinhood (HOOD) shot up 7.08% in Monday trading when its sports re-activation was announced before finishing Tuesday down 4.57%. It closed Wednesday up 6.73%.
According to Mizuho Group analyst Dan Dolev, a survey conducted by his firm shows about 78% of active Robinhood users are interested in using the platform as a sports betting-like product. Morgan Stanley analyst Michael Cyprys added this week that sports event futures trading is “resonating with their consumer base.”
Robinhood did not respond to a comment for this story. In a statement earlier this week, the company wrote that it looks forward to “continuing to work with [the CFTC] to promote innovation in the futures, derivatives and crypto markets.”
The CFTC assesses Robinhood differently from Crypto.com, another company that has recently promoted sports-related futures, because Robinhood merely works as a brokerage platform while Crypto.com also owns the Northern American Derivatives Exchange, which underpins its trades.
Robinhood uses Kalshi, a firm it does not own, as its exchange. Webull recently tapped Kalshi as its event contracts exchange of choice, too, though it does not plan to offer sports-related transactions to customers.
Under CEO Tarek Mansour, Kalshi operates both as a CFTC registered exchange that partners with external companies, such as Robinhood and Webull, and a trading platform via its own app. Kalshi has benefited from its early mover status in the U.S. for election and sports contracts.
While safe from direct CFTC scrutiny, Robinhood could still be caught in the crossfire of state-level action from attorneys general and tribal groups. Kalshi received a cease-and-desist order from Nevada’s Gaming Control Board earlier this month alleging a violation of state gaming laws, and more states could follow with similar edicts.
Nevada granted Kalshi a “limited” extension to a March 14 takedown deadline to stop offering its sports event futures trading in the state, said Michael Lawton, a senior economic analyst at the Nevada Gaming Control Board, in an email. Neither Lawton nor Kalshi was willing to provide additional details regarding the status of the cease-and-desist order.
Meanwhile, the CFTC will hold a roundtable at its Washington, D.C., headquarters to discuss the merits of event futures and what policy position it should take on them. Acting CFTC chair Caroline Pham said in a speech at the International Futures Industry Conference last week that the roundtable will take place at the end of April.
As Sportico has reported, it is widely expected that the CFTC will ultimately settle on a permissive approach to sports event futures contracts. From there, it would be up to individual states such as Nevada or tribal advocacy groups to stage legal challenges that could take years to resolve.
(This story has been updated with Robinhood’s closing stock price on Wednesday.)
