The U.S. presidential election is drawing near, and Robinhood has joined the trend by offering event contracts for traders to bet on the potential winner of the White House. The popular investing app, through Robinhood Derivatives, introduced two contracts on Monday that allow traders to speculate on whether former President Donald Trump or current Vice President Kamala Harris will secure the election. As the candidates make their final appeals with just seven days remaining in the 2024 race, this move by Robinhood follows the emergence of blockchain-based prediction platforms like Polymarket, which have brought election betting into the spotlight.
Similar to Polymarket, traders can purchase contracts for a candidate that will adjust in price and eventually payout $1 per contract if the chosen candidate wins. However, unlike Polymarket, Robinhood’s offering is exclusively focused on the U.S. market. The contracts are made available through ForecastEx, a futures commission merchant regulated by the Commodities Futures Trading Commission (CFTC). This decision by Robinhood comes in the wake of Polymarket being restricted to U.S. users since 2022 due to compliance issues with the CFTC.
To ensure fair and legal participation, individuals connected to the U.S. presidential election or politics, such as White House staff and presidential campaign members, are prohibited from engaging in the market. Furthermore, each participant must be approved by Robinhood Derivatives to take part in the event contracts. This move by Robinhood signifies the mainstream acceptance of political betting and highlights how regulatory changes are impacting firms’ approach to this space.
The recent legal victory of prediction market platform Kalshi over the CFTC sets a precedent for the industry. Despite the CFTC’s attempts to block Kalshi’s prediction markets, a federal judge ruled in favor of the platform, allowing it to launch U.S. election markets, starting with congressional bets. Following this development, Interactive Brokers, a multinational brokerage firm, also entered the election betting arena by introducing its own election-based contracts.
While the outcome of the election remains uncertain, the market offered by Robinhood Derivatives will be resolved two months after Election Day, once the results are certified by Congress. Based on the terms of ForecastEx’s U.S. presidential market contract, the expected resolution date is Jan. 7. Decrypt reached out to Robinhood for comment, but they did not respond at the time of publication.
In conclusion, the introduction of event contracts by Robinhood for the 2024 U.S. presidential election reflects the growing popularity of political betting and the evolving regulatory landscape in the prediction market industry. As the election draws closer, traders and investors will eagerly await the outcome and the resolution of the market contracts offered by Robinhood Derivatives.
