Robinhood Launches Election Betting Prediction Markets

Robinhood, which made waves for launching cryptocurrency investment options during the pandemic, is once again on the offensive with the app now featuring prediction markets for the upcoming US presidential election, which features former President Donald Trump and Vice President Kamala Harris competing for the White House.

Robinhood wants you to back an outcome – not bet on politics

The platform is taking a play from Kalshi’s book, the prediction market platform, which challenged the CFTC to allow it to go ahead and launch prediction markets – which the press has since labeled election betting – unchallenged.

Robinhood estimates that it can repeat this success story without risking too much and capitalize on the election betting fervor that has seized the United States. According to a statement by the firm, customers need to meet several conditions to be able to back an outcome on the platform’s prediction market:

“Customers must apply and meet certain criteria to be approved for an RHD account, including being a U.S. citizen and more. Once approved, customers will be able to trade based on their prediction of ‘who will win the 2024 presidential election.”

Customers who wish to bet on the outcome of the election ought to hold citizenship, but similarly hold a higher status within the platform’s unique hierarchy and be approved for margin investing and Level 2 or 3 options trading, the company further elaborated.

In other words, Robinhood is much more inclined to police who back an outcome on its platform and how this happens. The idea is to keep foreign interference at bay and potentially act preemptively against claims from the CFTC and other regulators who may find an issue with Robinhood’s prediction markets.

Robinhood is not launching an outright betting service, as this would most likely land the company in legal trouble but is rather pursuing a form of “future contract” betting which qualifies the markets as derivatives.

Call it what you want, people think political betting is now on

The distinction is crucial as there is no approved political betting as such in the United States, and for compliance reasons and optics, Robinhood is keen to maintain this. Commenting further, Robinhood sought to make it understood from the start how such instruments are supposed to work in the first place:

“An event contract is a type of financial derivative that allows traders to speculate on the outcome of a specific event. These contracts are generally structured around ‘Yes’ or ‘No’ outcomes, and fluctuate in price based on the projected outcome of the event.”

Overall, the upcoming elections next Monday are some of the most hotly-contested in the history of the country, and political betting – or “future markets” – have not helped ease tensions and qualms about the fairness of the outcome.