Robinhood's Super Bowl Betting Platform Controversy

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00:00A Robinhood, no stranger to any controversy, Sam, over the last few years is back in another

00:05controversy as well. They opened up this Super Bowl contract trading, sports contract trading,

00:11I think in a way similar to the crypto.com app. Robinhood opens it up,

00:15Kalshi's involved, and then 24 hours later, it's gone. What happened?

00:21Yeah, just a week before the Super Bowl, Robinhood, you know, the market that a lot

00:26of people trade stocks on casually, they said they were going to roll out this Super Bowl

00:32event contract trading market, which is basically just kind of a dressed up way of offering sports

00:38betting. Functionally, it would be your trading contracts on which team is going to win,

00:44what events are going to happen correctly, which, you know, if the Eagles win the Super Bowl,

00:49then you get paid out. If the Chiefs win the Super Bowl, then you get paid out if you pick

00:52them. So it functioned very similar to sports betting. But for their purposes, they packaged

00:58it differently. And we'll talk about that in a sec. But they were going to roll out this product

01:02in partnership with Kalshi, which is the election event contract trading platform,

01:06allowing their users in all 50 states to essentially bet on the Super Bowl, for lack of

01:12a better word. Obviously, sports spending is only legal in 38 states, only live in 37. So when they

01:18said they're going to roll this out, the CFTC, which governs, you know, trading futures, trading

01:24commodities, they said, hey, can you relax for a second and let us figure all this out. The Super

01:29Bowl is in a week. All of you trading platforms are now trying to do the sports thing. And you're

01:34doing it very quickly. You know, there wasn't the preparation of a FanDuel or DraftKings going into

01:39a state getting licensed, taking sometimes up to two years to launch it. They just said, we're

01:44going to go ahead and offer it. So they had about 1% of their users engage with it so far.

01:50They came out and said, you know what, we will halt it to kind of make good with the CFTC.

01:55So anybody who had traded on the platform, you can either hold your position or get your money back.

02:02It's kind of essentially cashing out or letting it ride. But this is this is sort of the latest

02:08development in this space. You mentioned Crypto.com offering a very similar product.

02:13The CFTC had asked Crypto.com to pause theirs as well. They have not so far, as I understand it.

02:19So you have some platforms kind of defying the ask, some not. And obviously, no stranger to

02:24controversy in this space. When you talk about this, you know, this kind of industry that's

02:29emerged so quickly, a lot faster than regulators are able to keep up with. A lot of the politicians

02:36making the laws don't even know what cryptocurrency is, don't know what events contract trading is.

02:41So it's just going to continue to develop into the kind of this new space, especially around

02:45major marquee events. And then you have federal agencies trying to play catch up here. So, you

02:50know, Calshi was partnered with them on this. Obviously, they had the whole election

02:54betting that happened. The CFTC had tried to pause that as well. It ended up ruling in Calshi's favor,

03:00one of the federal courts. So it could be a similar case here. It could be opening up a can

03:04of worms. But for now, it's paused. And they'll probably resume right after this year bowl,

03:08see kind of where everyone's at with this.