Well, it looks like Robinhood got the “regulatory clarity” it was looking for.
The derivatives arm of the Menlo Park, Ca.-based trading platform announced Monday that it was embedding a “prediction markets hub” in its app.
The move means that Robinhood customers can buy and sell event contracts from anywhere in the United States, including contracts tied to sporting events.
“At launch, the hub will allow customers to trade contracts for what the upper bound of the target fed funds rate will be in May, as well as the upcoming men’s and women’s College Basketball Tournaments,” Robinhood said in a press release.
Robinhood is rolling out a "prediction markets hub" for its app today, powered by Kalshi.
— Geoff Zochodne (@GeoffZochodne) March 17, 2025
From the jump, users can "trade contracts for what the upper bound of the target fed funds rate will be in May, as well as the upcoming men’s and women’s College Basketball Tournaments." pic.twitter.com/Yz11388nkY
The move by the popular trading platform highlights how de facto sports betting is being offered more and more by prediction market apps and sites.
Those prediction markets were a popular place to turn for election betting, but they are now standing by and ready to take action in all 50 states on March Madness, one of the busiest times of the year for sports gambling.
Monday’s announcement that Robinhood is diving deeper into prediction markets could also pump up the volume of that business, especially on the sports side.
The company has roughly 25 million customers, plenty of which are bound to be interested in sports and sports betting. That could inject a ton of liquidity into sports prediction markets that are still relatively new and operating amid legal uncertainty.
I can see clearly now
Robinhood CEO Vlad Tenev noted the lack of “regulatory clarity” during an earnings call last month. The company had rolled out event contracts for this year’s Super Bowl but backed off after the U.S. Commodity Futures Trading Commission (CFTC) requested that the company pull those markets down.
However, Robinhood’s mention of college basketball-related event contracts suggests it has received all the clarity it needs to jump into the arena of de facto sports wagering via prediction markets.
“We have been in close contact with the CFTC over the past several weeks and look forward to continuing to work with them to promote innovation in the futures, derivatives and crypto markets,” Robinhood said in its press release.
Robinhood also said Monday that its hub and event contracts would be available throughout the U.S. using a partnership with Kalshi, a CFTC-regulated exchange at the forefront of the growing prediction market business.
The bulk of legal sports betting in the U.S. takes place with state-regulated sportsbooks such as DraftKings and FanDuel.
More recently, though, prediction operators like Kalshi have been offering an increasing assortment of sports-related event contracts, including single-game and futures markets for March Madness. Those contracts are available everywhere in the U.S., not just in states that have authorized sports wagering.
If it looks like a duck ...
On Monday, for example, a Kalshi user could buy a "yes" contract for Xavier to beat Texas in Wednesday's play-in game. That 59-cent contract could pay the buyer 41 cents if the Musketeers pull it off.
With all that said, it should be noted the legitimacy of sports event contracts such as those being offered by Kalshi and Robinhood is being challenged, including by representatives of the legal gambling industry. The contracts being traded right now are being “self-certified” by operators, and whether they will stand up to further legal and regulatory scrutiny remains to be seen.
There are other concerns as well, such as conflating investing and betting, ensuring the integrity of sporting events, and problem gambling.
“Putting aside whether futures legally constitute gambling, from a problem gambling standpoint, betting on futures is functionally gambling,” a representative of the National Council on Problem Gambling said in a letter to the CFTC earlier this month. “The line between purchasing futures and gambling has particularly blurred with markets offered related to sporting events. NCPG is concerned about a form of gambling taking place outside of the responsible gambling tools framework and problem gambling safeguards required by gambling regulators.”
