Online trading platform Robinhood has positioned itself as the financial app of the people, promising “investing for all.” Apparently the company has decided that what the people need as the stock market continues to undergo a “correction” is the ability to gamble. On Monday, the company announced that it will launch a new prediction hub in its app that will allow people to “trade on the outcomes of some of the world’s biggest events,” which is apparently distinct from gambling in some way.
Per Robinhood’s press release the predictions hub will launch with the ability for people to “trade contracts” on what they believe will be the upper bound of the target interest rate the Federal Reserve will announce in May. It’ll also launch with the ability to predict the outcomes of the upcoming March Madness tournament, with both the men’s and women’s brackets available.
While the hub will live 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 drawn ire from that very same agency for allowing people to bet on the outcome of elections. Shortly before Trump took office, the CFTC accused Kalshi’s election contracts of being a “Trojan horse to facilitate Kalshi’s transformation into a large-scale election gambling market.”
But don’t worry, Kalshi has quelled those fears by…adding Donald Trump, Jr. to its board of advisers. So, less “addressed outstanding concerns about unregulated gambling” and more “buddied up to the kid of the president,” but you know, same outcome!
Robinhood has tried to get into the predictions game before. It allowed people to bet on the outcome of the presidential election, which drew criticism from lawmakers for failing to offer sufficient protections for users who were being exposed to speculative “investing.” The company tried to get in on the Super Bowl, too, but pulled back after the CFTC asked it to hold its horses. That, too stemmed from Kalshi, which was the exchange offering the contracts that Robinhood allowed its users to buy—but that seems to have resolved itself, as new CFTC acting Chairman Caroline Pham signaled these contracts will be allowed under the new administration.
If you’re wondering what the difference between futures contracts tied to the outcome of things like elections and sporting events and gambling is, join the club. The whole argument here appears to be that you aren’t betting on odds set by a bookmaker but are instead purchasing a “derivatives contract” tied to the outcome of a specific event. That apparently makes it an investment and not a bet.
A federal judge has upheld the legality of this kind of “investing” despite objections of the previous administration’s CFTC, so it seems like Robinhood probably has a green light here. For the time being, with the Peter Thiel-backed Polymarket still technically illegal in the US, it also has a pretty strong hold on the market.
Surely there is no social commentary to be found in the fact that the service that is supposedly “democratizing finance” (please do not bring up the time it literally stopped retail traders from purchasing or selling certain stocks because it was costing the wrong people money) is rapidly devolving into a platform for purely volatile and speculative “assets” like crypto and events predictions. The people with the least information and the most to lose now have access to the riskiest bets. What could go wrong?
