Robinhood announced on October 28 that it would enter the prediction betting market, allowing users to trade contracts on the outcome of the 2024 presidential election just eight days before voters head to the polls.
This expansion comes as the political prediction market becomes increasingly competitive, particularly following an important ruling in favor of Kalshi against the Commodity Futures Trading Commission (CFTC).
Robinhood Enters Prediction Betting Market Ahead 2024 Presidential Election
This new feature lets users wager whether Donald Trump or Vice President Kamala Harris will win the election, provided they meet specific criteria, including U.S. citizenship.
The trading will be managed through Robinhood Derivatives and ForecastEx, a system operated by Interactive Brokers, offering payouts of up to $5,000 for choosing the winning candidate.
“We believe event contracts give people a tool to engage in real-time decision-making, unlocking a new asset class that democratizes access to events as they unfold,” Robinhood said in a statement.
Currently, only presidential election contracts will be available on the platform.
Robinhood’s new election betting feature will allow users to buy contracts between $0.02 and $0.99. These prices reflect each candidate’s market-implied odds of winning, meaning that if a user bets on the winning candidate, they’ll receive a $1 payout per contract.
The platform has set a cap, allowing users to buy a maximum of 5,000 contracts per candidate, which translates to a $5,000 payout for those who correctly predict the winner.
The platform will offer extended trading hours leading up to Election Day, beginning at 8 a.m. EDT and closing at 8 p.m. EDT, with hours expanding further as the election nears. Robinhood users who place winning bets will receive their payouts in January 2025.
Trump Leads the Odds: Can Robinhood Users Capitalize on Election Betting Trends?
Robinhood joins prediction platforms like Polymarket, Kalshi, and PredictIt, further fueling the election betting market’s momentum this year.
These betting options have garnered regulatory attention, particularly from the Commodity Futures Trading Commission (CFTC), which has raised concerns over the potential impact of election wagers on voter behavior and election integrity.
However, a recent federal court ruling found in favor of Kalshi against the CFTC, adding a legal precedent to support election betting. Unlike some U.S.-based platforms, blockchain-powered Polymarket operates internationally and does not face the same user limits.
Just last week, Polymarket, an international prediction platform, revealed that a single French user was responsible for four accounts spending millions to acquire Trump contracts.
However, Polymarket reported that an investigation showed no manipulation of the market.
Election betting markets currently show strong odds favoring Trump, with Election Betting Odds pricing his victory at 62%.
This is higher than many poll-based prediction models, such as FiveThirtyEight, which gives Trump a 54% chance, and Nate Silver’s Silver Bulletin, which places him at 52.9%.
For Robinhood users, this pricing means a contract on Trump might open at $0.62, while a Harris contract could be priced around $0.38. Users who bet on Trump at those odds could see a 60% return, while a Harris victory would yield a 160% return on investment.
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