Robinhood trading app now allows betting on US election results
Robinhood, the US-based financial services company, has launched a new feature enabling users to trade contracts, based on the expected outcome of the upcoming presidential election between Donald Trump and Kamala Harris. The move comes just a week ahead of the election and gives users a new way to engage with the political process through their platform. The initiative was launched on Monday and is now available on Robinhood's trading platform.
Legal victory paves way for election-focused trading
Robinhood's move to bring this feature has been inspired by a recent legal victory of Kalshi, another trading platform. Kalshi had successfully challenged the Commodity Futures Trading Commission (CFTC)'s effort to prevent trading on election outcome contracts. This win set a precedent for Robinhood and other financial platforms to explore political event-based markets.
Election trading: How does it work?
To trade in these election outcome contracts, users need to be US citizens and get Robinhood's approval. Once approved, they can place trades according to their predictions for the 2024 presidential election. The platform offers two contracts - one for Kamala Harris and one for Donald Trump. This one-of-a-kind opportunity comes from Robinhood's Derivatives unit in partnership with ForecastEx.
Robinhood's expansion into event-driven markets
Robinhood's entry into election outcome contract trading is its foray into event-driven markets. This way, users can bet on political outcomes in addition to regular investments. "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. The company's shares jumped 4% after the news.
Robinhood's future plans and market response
Robinhood intends to slowly roll out these contracts on the US election to a limited number of users. The idea of event derivatives trading, where traders purchase and sell contracts speculating on certain outcomes like elections or economic indicators, has caught on in recent years, even though it is a relatively new and high-risk practice. This comes as part of Robinhood's wider plan to evolve from a retail investor platform into a full-fledged financial services provider.
