New Feature Allows Users to Bet on Real-World Events
Robinhood (HOOD) has launched a prediction markets hub within its app, enabling users to bet on outcomes of sports, politics, and economic events. The feature, announced on Monday, is part of Robinhood’s strategy to attract younger investors and diversify its financial services.
The new offering is powered by KalshiEX LLC, a Commodities and Futures Trading Commission (CFTC)-regulated exchange. It comes just in time for March Madness, allowing users to wager on NCAA basketball tournament results.
“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,” said JB Mackenzie, Robinhood’s GM of Futures and International.
How Robinhood’s Prediction Markets Work
The prediction market operates like a trading platform where users buy contracts representing different outcomes:
- Each contract pays $1 if the prediction is correct.
- Prices fluctuate based on supply, demand, and probability.
- For example, in the men’s NCAA tournament, a contract predicting Purdue winning a game costs 77 cents, paying out $1 if Purdue wins.
- Underdog High Point has contracts priced at 25 cents, meaning a win would yield 75 cents profit per contract.
Robinhood plans to expand its prediction market offerings to include more events.
Robinhood’s Growth Strategy
The prediction markets hub is part of Robinhood’s effort to become a one-stop financial platform for the next generation of investors. In 2024, the company pursued multiple acquisitions, enhanced premium services, and launched a desktop trading platform.
Robinhood aims to capture a share of the estimated $84 trillion in wealth expected to transfer from older to younger generations over the next 20 years.
Stock Performance and Market Reaction
Following the announcement:
- Robinhood stock jumped 7% on Monday.
- The stock then dropped 4.6% on Tuesday.
- HOOD shares are still up 8% in 2025 but have fallen from their February 13 high of $66.91.
Robinhood’s 21-Day Average True Range (ATR) is 12.78%, indicating high volatility.
