Robinhood is making waves in the financial world with its latest venture into the realm of betting markets. Known for revolutionizing stock trading, Robinhood is now expanding its horizons to include cryptocurrencies and event contracts. This bold move was announced on March 17, and it has already sent ripples through the market.
Following the announcement, Robinhood’s stock, HOOD, surged by approximately 8% on the Nasdaq. This uptick reflects investor excitement about Robinhood’s new betting feature, which allows users to trade contracts on predictions such as the Federal Reserve’s target interest rate and the outcomes of major college basketball tournaments.
The secret sauce behind this new feature is Kalshi, the first CFTC-regulated prediction platform in the United States. Kalshi is no stranger to the world of event contracts, having already listed a wide range of predictions, from election results to movie ratings on Rotten Tomatoes.
Prediction markets are gaining traction as they offer a unique intersection of news, economics, politics, sports, and culture. JB Mackenzie, Robinhood’s vice president and general manager of futures and international, emphasized the importance of these markets in capturing public sentiment more accurately than traditional polls.
In fact, platforms like Kalshi and Polymarket have a track record of predicting political outcomes with remarkable accuracy. They famously foresaw Donald Trump’s election victory when many polls suggested otherwise. This accuracy has fueled the popularity of prediction markets in the U.S., especially since Kalshi’s legal victory in September 2024, allowing it to list political event contracts.
By November, trading volumes in prediction markets reached nearly $4 billion, driven by contracts tied to U.S. elections. Robinhood dipped its toes into political event contracts in October, allowing select users to bet on the presidential election outcome between Kamala Harris and Donald Trump.
However, Robinhood faced a hiccup in February when it had to suspend Super Bowl betting at the CFTC’s request. Despite this setback, Robinhood remains committed to expanding its presence in emerging asset classes.
Beyond betting markets, Robinhood is also making strides in the world of cryptocurrencies and derivatives. In March, the company listed popular memecoins like Pengu (PENGU), Pnut (PNUT), and Popcat (POPCAT) to bolster its crypto offerings. Earlier in January, Robinhood introduced futures contracts tied to cryptocurrencies such as Bitcoin (BTC).
Robinhood’s latest earnings report reveals a staggering 700% year-over-year increase in crypto revenues for the fourth quarter of 2024. This surge was fueled by Trump’s election win and rising market prices, which boosted crypto trading activity.
As Robinhood continues to expand its horizons beyond traditional stock trading, it remains at the forefront of innovation in the financial world. With its foray into betting markets and cryptocurrencies, Robinhood is poised to capture the attention of both investors and crypto enthusiasts alike.
