Massachusetts Probes Robinhood, Proposes In-Game Ad Ban
Robinhood is facing pressure from officials in Massachusetts as the Final Four approaches. The state’s top securities regulator launched an investigation into the online exchange last week at the start of the tournament.
In an interview with Reuters, Massachusetts Secretary of State Bill Galvin blared alarm bells over the new trading product at Robinhood. In particular, Galvin expressed unease at the link between a popular sports event and a brokerage exchange that is available to young customers.
“This is just another gimmick from a company that’s very good at gimmicks to lure investors away from sound investing,” Galvin told the outlet March 24. Galvin’s office sent a subpoena to Robinhood last week with an inquiry concerning the number of Massachusetts residents who traded contracts on the NCAA men’s and women’s tournaments during the early rounds.
A Robinhood spokesman noted that event contracts are regulated by the U.S. Commodity Futures Trading Commission (CFTC). The CFTC is set to convene a roundtable next month on the near-term implications of event contracts on sports. A host of tribal gaming entities support a blanket prohibition on the derivatives, contending that they expressly mirror sports betting, which is regulated by the states.
Elsewhere, Massachusetts Sen. John Keenan touted a new bill at a State House event March 26. The “Bettor Health Act,” proposed by Keenan, seeks to enact a prohibition on sports betting commercials during live sports events.
The act also contains proposed bans on in-game wagering and prop bets. Finally, Keenan seeks to more than double the corporate tax rate on sports betting gross gaming revenues. If passed, the rate would increase to 51 percent, which would tie New York and New Hampshire for the highest in the nation.
The bill would require operators to double their contributions to the commonwealth’s Public Health Trust Fund, which supports gambling addiction treatment services. Keenan has drawn comparison to the rise in problem gambling with some of the public health issues that arose during the Opioid Crisis.
“If we don’t see the similarities, we’re going to find ourselves again so far behind trying so hard to create an infrastructure to address it,” Keenan said, per NBC Boston.
Oklahoma Bills Advance in Spite of Stitt’s Plans for Vetoes
Several Oklahoma bills passed through the state legislature this week, despite continued opposition from Gov. Kevin Stitt.
Two bills authored by Rep. Ken Luttrell passed through the House by an overwhelming margin. The first, HB 1047, enables tribal gaming compacts to be amended throughout the state for inclusion of sports wagering. The bill requires at least four tribal groups to amend their compacts. The next, HB 1101, would put the decision of legalizing sports betting up for a referendum.
Under the proposed bills, the state would receive 10 percent of operator revenues from sports wagering. Stitt has vowed to veto any legislation that grants the tribes exclusivity.
“These are tribal-pushed bills that are only going to benefit the tribes and not the citizens of Oklahoma,” said Stitt this week.
The legislature can override a veto by passing a bill with two-thirds majority. Also this week, SB 585 passed in the Senate. The bill would grant the Oklahoma City Thunder the right to receive a sports betting license. The Thunder, who hold the NBA’s best record at 61-12, are the favorites at FanDuel Sportsbook to win the 2025 championship.
Bet365 Exits Chinese Market
Bet365 informed customers that it will cease operations in China, removing a major obstacle in a potential M&A deal.
The company’s gray market activities in China have long provided a source of controversy. Now that it has launched a regulated market, analysts at Regulus Partners described China’s as bet365’s last “material dark grey market,” iGB writes. With the departure from China, more than 90 percent of bet365’s revenues come from domestically regulated markets, according to Regulus.
By extricating itself from the illegal markets abroad, bet365 may become an attractive acquisition candidate in the U.S. In the 12-month period ending in March 2024, bet365 generated revenues of £3.7 billion, up 9 percent from the previous year, and operating profits of £397 million. The company could command a multiple comparable to Flutter at 18x of adjusted EBITDA, according to newsletter Earnings + More. At that rate, bet365’s valuation may approach $10 billion.
At the moment, bet365 is live in 13 U.S. states, with Missouri poised to launch sports betting in the second half of the year. When bet365 notched a deal with the St. Louis Cardinals March 24, it became the MLB team’s first mobile sports betting partner.
