(WBBM NEWSRADIO) — A suburban Chicago congressman is questioning a financial service's decision to allow people to bet on the results of the presidential election.
In a letter sent to Robin Hood officials, Illinois Congressman Sean Casten and four others say in part, “It appears that Robin Hood has capitalized on election betting to expand its profits, which could come at the expense of protecting investors.”
Just two weeks before the 2024 election, Robin Hood launched political event contracts.
Users were allowed to buy and sell those contracts, which are generally structured as options that look more like online gambling.
The letter goes on to say, “this marketing raises concerns, especially given Robin Hood's history of exploiting inexperienced traders.”
The letter incudes several questions for Robinhood, including:
1.Please detail the specific user information that Robinhood evaluates for Level 2 and 3 options trading approval.
2. What steps did Robinhood take during the 2024 election cycle to protect less sophisticated bettors from high-risk political gambles?
3. What safeguards are in place to prevent market manipulation in Robinhood’s political event contracts?
4. Why are users only allowed to trade political event contracts in-app and not on Robinhood’s website?
5. How does Robinhood differentiate between responsible investing opportunities and speculative gambling in its marketing and user experience?
6. How does Robinhood address concerns that political betting markets could undermine trust in democratic institutions and contribute to misinformation?
A college student from Naperville took his own life back in 2020 after Robin Hood approved him for options trading that he wasn't able to cover.
The full letter can be viewed here.
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