Published on: October 28, 2024, 07:37h.
Last updated on: October 28, 2024, 07:37h.
As Election Day draws near, Robinhood has joined the realm of political wagering in the investment industry.
Robinhood, known for its popular mobile investment app among millennials and Gen Z, has introduced contracts involving former President Donald Trump (R) and Vice President Kamala Harris (D) to a select group of customers.
Customers must meet specific criteria, including being a US citizen, to open an RHD account and trade based on their prediction of the 2024 presidential election winner,” the brokerage firm said in a statement.
Aside from US citizenship, clients aiming to buy event contracts for Harris or Trump must also be approved for margin investing and Level 2 or 3 options trading. The additional citizenship requirement may stem from foreign market participants influencing other election wagering platforms and potentially distorting traditional political polling.
Robinhood’s Approach to Election Betting
Similar to established players in political betting, Robinhood does not accept traditional wagers.
Instead, the platform offers clients futures contracts based on specific events, making these instruments derivatives. This differs from sportsbooks that offer political race bets at fixed odds. Such bets are prohibited in the US.
On Robinhood and other political betting platforms, traders buy event contracts with binary outcomes.
“An event contract is a type of financial derivative that lets traders speculate on a specific event’s outcome. These contracts generally focus on ‘Yes’ or ‘No’ outcomes and fluctuate in value based on the projected event outcome,” the company explained. “Event contracts pay out on the correct outcome matching the held position (e.g., the 2024 presidential election winner); otherwise, they expire worthless.”
Brokerage Firms Embrace Election Betting
Robinhood’s entry into election betting follows Interactive Brokers’ announcement of similar plans six weeks prior. Both platforms, along with Kalshi, are facing a legal challenge from the Commodities Futures Trading Commission (CFTC) for offering political bets.
If allowed to proceed with event contracts for the 2024 presidential election and expand future offerings as planned, Robinhood could benefit, potentially driving mainstream momentum in political wagering given its 24.2 million funded customers, 11.8 million of whom are active monthly.
Contracts for Harris/Trump on Robinhood are priced from two cents to 99 cents each, with $1 as the maximum trading value. Clients can purchase up to 5,000 election contracts.