Robinhood launches prediction markets to tap into event contracts demand

Reuters

Mon, Mar 17, 2025, 6:01 AM 2 min read

(Reuters) -Trading level Robinhood connected Monday launched a prediction markets hub successful its app that allows customers to commercialized connected lawsuit outcomes, including the expected precocious bounds of the Federal Reserve funds complaint successful May.

The company, which has go synonymous with retail investors successful the U.S., is looking to currency successful connected the increasing request for event-based derivative contracts, erstwhile a niche plus class.

Event-based derivatives are gaining traction arsenic traders question to stake connected real-world outcomes, specified arsenic Fed decisions oregon elections, offering a straightforward, all-or-nothing payoff tied to circumstantial events.

However, the emergence of event-based derivatives trading has drawn regulatory scrutiny, with concerns implicit gambling-like risks and the imaginable for marketplace manipulation.

Robinhood shares were past up 1.7% successful premarket trading connected Monday.

In February, Robinhood scrapped lawsuit contracts allowing users to stake connected the Super Bowl result conscionable a time aft launch, pursuing a petition from the U.S. Commodity Futures Trading Commission.

The determination came aft its wildly fashionable motorboat of contracts to stake connected the U.S. statesmanlike predetermination successful October.

Robinhood said it has been successful adjacent interaction with the CFTC successful caller weeks and looks guardant to continuing to enactment with the regulator.

"Businesses and investors tin usage these markets to hedge against uncertain events and associated risks, specified arsenic predetermination outcomes, regulatory changes, oregon economical shifts," Robinhood said successful a precocious released argumentation connection connected the products.

The motorboat furthers the trading platform's strategy of evolving into a broad fiscal services supplier and competing with established brokerages catering to organization clients.

Its prediction markets volition initially beryllium disposable crossed the U.S. done KalshiEX LLC, a CFTC-regulated exchange, the institution said.

Robinhood added that eligible customers volition besides beryllium capable to stake connected the results of the upcoming men's and women's assemblage hoops tournaments.

(Reporting by Manya Saini and Niket Nishant successful Bengaluru; Editing by Shreya Biswas)