Robinhood, an online trading platform, is positioning itself as the people’s financial app, promising “investing for all.”
The corporation appears to have determined that the freedom to gamble is what the people require as the stock market continues to experience a “correction”.
On Monday, the firm said that it will add a new prediction hub to its app that will allow individuals to “trade on the outcomes of some of the world’s biggest events,” which appears to be distinct from gambling in some way.
According to Robinhood’s press release, the predictions center will start with the option for consumers to “trade contracts” on the upper bound of the Federal Reserve’s target interest rate, which will be announced in May.
It will also include the opportunity to forecast the results of the forthcoming March Madness tournament, with both men’s and women’s brackets available.
While the hub will be housed in the Robinhood app, the “contracts” are being made available by Kalshi, which is technically a federally regulated exchange under the Commodity Futures Trading Commission—but has also come under fire from the same agency for allowing people to bet on election outcomes.
Shortly before Trump took office, the CFTC accused Kalshi’s election contracts of serving as a “Trojan horse to facilitate Kalshi’s transformation into a large-scale election gambling market.”
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Kalshi’s board of advisers now includes Donald Trump, Jr., easing concerns. So, less “addressed outstanding concerns about unregulated gambling” and more “buddied up to the president’s child,” but still the same result!
Robinhood has attempted to enter the prediction game before. It allowed people to gamble on the outcome of the presidential election, which sparked criticism from lawmakers for failing to provide adequate safeguards for users who were exposed to speculative “investing.”
The company attempted to participate in the Super Bowl as well, but was forced to withdraw after the CFTC requested that it hold their horses. That, too, arose from Kalshi, the exchange that offered the contracts that Robinhood allowed its users to purchase—but it appears to have been resolved, since incoming CFTC acting Chairman Caroline Pham has hinted that these contracts will be permitted under the new administration.
Join the club if you’re curious about the difference between futures contracts tied to the outcome of events such as elections, sports, and gambling. The entire argument here appears to be that you aren’t betting on bookmaker odds, but rather acquiring a “derivatives contract” related to the outcome of a certain event. This supposedly makes it an investment rather than a bet.
Despite complaints from the previous administration’s CFTC, a federal judge has maintained the legality of this type of “investing,” therefore Robinhood appears to be in the clear. For the time being, with the Peter Thiel-backed Polymarket being technically illegal in the United States, it maintains a strong market position.
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