Robinhood is getting into the prediction market and letting customers wager on the end result of the presidential election, the corporate introduced on Monday.
Meaning beginning Monday customers can start to commerce contracts for both Vice President Kamala Harris or former President Donald Trump to win the election in November. Customers must meet sure standards with a view to be eligible to make these trades, similar to being a U.S. citizen and having already been accepted for a Robinhood Derivatives account.
The election prediction market shall be provided by way of Robinhood Derivatives. Betting on the election is a sort of economic hypothesis referred to as an occasion contract during which an investor earns a return if a future occasion happens. On this case, whether or not Trump or Harris will change into president.
Betting on the presidential election is the inaugural occasion contract provided at Robinhood, based on the corporate’s web site. As of now, it’s the solely wager accessible on Robinhood’s prediction markets.
Robinhood’s determination to start providing election futures comes shortly after one other prediction markets platform, Kalshi, gained a ruling in opposition to the Commodity Futures Buying and selling Fee that had been making an attempt to dam it from providing election end result buying and selling. The CFTC plans to attraction the ruling. Nonetheless, the schedule for the listening to means the difficulty gained’t be determined earlier than Election Day on Nov. 5.
Traders in prediction markets can purchase both a Sure or No contract for every of the candidates. The worth varies based mostly available on the market’s perception of every candidate’s chance to win the election. Robinhood customers are usually not allowed to personal Sure contracts for each candidates, based on the corporate’s web site.
A spokesperson for Robinhood advised Fortune the choice was meant to broaden the platform’s merchandise for its clients. “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,” the spokesperson stated through e-mail. “By providing election contracts on Robinhood, customers will now have the ability to participate in contract markets that were previously unavailable to US citizens.”
A number of the greatest prediction markets platforms are PredictIt and Polymarket, which have each gained vital consideration all through the election season. That’s partially as a result of in latest weeks prediction markets have tilted closely in favor of Trump, whereas voter polls nonetheless present a race that’s lifeless even.
On PredictIt, the value of a Sure contract for Trump and Harris is 61 cents and 42 cents, respectively. These costs mirror the sum of money an individual would want to wager with a view to obtain a $1 payout. Customers may also promote any contracts they personal on the open market if they need. Doing so may also supply a return if the present worth of the contract is greater than the value at which somebody bought it. In that case, their earnings can be the distinction between the 2 costs.
Polymarket, which payments itself because the world’s largest prediction market, has Trump as much more of a favourite. Its odds have a Trump win priced at 66 cents and Harris at 34 cents. Within the dwelling stretch of the marketing campaign, Polymarket noticed a number of main bettors, colloquially referred to as whales, place huge bets on a Trump win. A single particular person from France believed to manage 4 separate Polymarket accounts wager round $45 million on Trump. Polymarket has completely different pointers than Robinhood. Polymarket doesn’t permit buyers betting on the U.S. election to be within the U.S. and customers should place their bets in cryptocurrency.
One rule that Robinhood buyers would possibly need to be aware is that in the event that they wager on the precise end result, their payday gained’t occur till the election is formally licensed by Congress. Payouts shall be issued on Jan. 8, two days after the election is licensed on Jan. 6.
