Robinhood kickstarts event contracts offering with March Madness

Robinhood has returned to the event contracts space, with markets for this month’s March Madness college basketball tournament housed on a new, dedicated prediction markets hub in the Robinhood app.

Robinhood said today, March 17, that the retail trading platform would give its customers the “opportunity to trade on the outcomes of some of the world’s biggest events.”

The hub, which will also offer a market on what the upper bound of the target fed funds rate will be in May, will start rolling out contracts to eligible customers from today.

The standalone prediction markets hub will be powered in the US via Kalshi, the New York-based firm that has emerged as a frontrunner in the event contracts sector.

The launch comes after Robinhood U-turned on an initial rollout ahead of last month’s Super Bowl following a request from the US derivatives regulator, the Commodity Futures Trading Commission (CFTC).

However, the firm said it had been in “close contact” with the CFTC in recent weeks and would continue to work with the regulator to “promote innovation in the futures, derivatives and crypto markets.”

Robinhood said: “Building a standalone prediction markets hub allows us to better serve our customers as they look to engage with events that align with their interests.

“Prediction markets operate within a regulated framework and leverage the power and rigour of financial market structure to facilitate greater liquidity, transparency and price discovery.”

Robinhood added that event contracts for both March Madness and target-fed funds rate will be available to trade daily from 8am to 3am ET.

JB Mackenzie, Robinhood vice president and general manger of futures and international, said: “We believe in the power of prediction markets and think they play an important role at the intersection of news, economics, politics, sports, and culture.

“We’re excited to offer our customers a new way to participate in prediction markets and look forward to doing so in compliance with existing regulations.” 

Alongside the announcement, Robinhood also released a prediction markets white paper, in which it claimed policymakers should view the product as “generally in the public interest.”

The document detailed what types of markets could be introduced to the event contracts space, including politics, the weather, the economy, and sports.

The white paper stated: “Policymakers should adopt policies that continue to recognise that the prediction markets, including event contracts related to economic events, commodities, weather events, sporting events, and political events, have economic value and are generally in the public interest, as they can provide legitimate hedging, risk-management, speculative and informational benefits for individuals and businesses of all sizes.

“Moreover, policymakers should avoid rules that prohibit retail customers from taking advantage of the same opportunities available to institutional investors.”

Earlier this month, Robinhood CEO Vladimir Tenev said event contracts represent the future of trading and news media.

Kalshi, which followed Crypto.com in pushing out event contracts for sports, was targeted by regulators in the US state of Nevada this month, with a cease-and-desist order being handed down.

The company’s CEO, Tarek Mansour, has vowed to “keep marching” to drive the sector to its “full potential”, despite the intervention from the Nevada Gaming Control Board (NGCB).

The NGCB has since confirmed it has granted Kalshi more time to determine its fate in Nevada following a request from outside counsel representing the exchange firm.

The regulator did not disclose how much additional time Kalshi had been granted.