Closer look at Robinhood's Sports Prediction Markets
Published:
Mar 26, 2025
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01:11 p.m.
ET
Key Points:
Robinhood now allows users to trade sports-based contracts via “prediction markets” that many argue are a form of unregulated sports betting, as profits depend on a user’s ability to correctly predict the outcomes of sporting events.
Robinhood’s sports prediction markets are available in all 50 states, despite only 38 states having legalized sports betting.
Robinhood offers these through a partnership with Kalshi, which last year was successful in its defense of a legal challenge around political election-based prediction markets.
There have already been legal inquiries in Nevada and Massachusetts focused on these new sports prediction offerings by Kalshi and Robinhood.
Sports prediction markets and sports betting both involve risking real money, with profits or losses dependent on the success of the predictions on sports results.
Kalshi added Donald Trump Jr. as a “strategic advisor” in January.
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Robinhood, known for commission-free stock trading, ETFs, options and cryptocurrency, has recently ventured into the space of sports prediction markets, which many argue are simply another name for sports betting. In essence, Robinhood has partnered with a company called Kalshi to capitalize on the concept of “sports event trading.”
The partner, Kalshi, is an exchange that is currently regulated by the Commodity Futures Trading Commission (CFTC) after an initial legal challenge last year around election-focused prediction markets. Now, they’ve taken their offering a step further by offering event-based market options for sporting events. Robinhood now offers users the opportunity to buy and sell “event contracts” related to sports outcomes, notably March Madness games, meaning the NCAA Men's and Women's Basketball Tournaments.
Kalshi users - largely through Robinhood - generated nearly $250 million worth of “contracts” through the first two rounds of NCAA tournament play.
This move has sparked interest and controversy, especially considering Robinhood attempted and failed to offer sports-based event contracts for the Super Bowl back in February, upon receiving a request from the CFTC a day after their original announcement. With people in all 50 states having access to trading contracts connected to college basketball results through Robinhood, despite sports betting being legal in just 38 of those states, questions are being raised about the legality of these markets and potential implications.
Does Robinhood now offer sports betting?
Robinhood's introduction of sports prediction markets allows users to trade contracts based on the outcomes of sporting events. “Buy” your prediction contracts, and profit when they are right.
Robinhood, which boasts 25 millions users (dwarfing FanDuel’s 4.5 million), maintains that these offerings are distinct from traditional sports betting. According to JB Mackenzie, VP & GM of Futures and International at Robinhood, "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."
Unlike conventional sportsbooks where bettors wager against the house, Robinhood's model enables users to trade under the free market dynamics of trading. This peer-to-peer structure is facilitated through their partnership with Kalshi, which is, in part, an attempt to meet compliance with existing financial regulations.
Robinhood's Partnership with Kalshi
Kalshi is a CFTC-regulated exchange specializing in event contracts, allowing users to speculate on the outcomes of various events, including politics, pop culture and sports. By collaborating with Kalshi, Robinhood integrates these event contracts into its platform, providing users with a novel way to engage with sports events like March Madness. This partnership aims to combine Robinhood's user-friendly interface and massive base of active users with Kalshi's regulatory compliance to offer a unique trading experience.
Where are Robinhood’s sports prediction markets available?
Robinhood's sports prediction markets are accessible nationwide through the app's "Prediction Markets" hub. This feature is integrated into the main page, providing users with immediate access upon opening the app. By leveraging Kalshi's platform, Robinhood currently offers these markets across the United States, irrespective of individual state regulations concerning sports betting.
How can they offer sports prediction markets in states without legalized sports betting?
The legality of Robinhood's sports prediction markets in states without legalized sports betting hinges on the classification of these event contracts. Since they are offered through a CFTC-regulated exchange and framed as trading instruments rather than traditional gambling, Robinhood and Kalshi argue that they do not constitute sports betting.
This distinction allows them to operate in jurisdictions where sports betting remains illegal. However, this approach has attracted regulatory scrutiny. In addition to legal action in Nevada against Kalshi, Massachusetts Secretary of State Bill Galvin has initiated an investigation into Robinhood's offering, expressing concern about linking gambling events to brokerage accounts.
The concern is that this sports betting-like offering is simply a way to offer sports gambling more widely outside of existing regulatory frameworks. Galvin’s office issued a subpoena to Robinhood seeking information related to how many of its brokerage account users in the state have requested to trade college sports events contracts.
How are sports prediction markets different from sports betting?
While both involve speculating on sports outcomes, Robinhood has stated that prediction markets operate under financial regulations governed by agencies like the CFTC, whereas sports betting is regulated by state gaming commissions. Robinhood also points to the market structure: prediction markets facilitate peer-to-peer trading of event contracts. In contrast, traditional sports betting involves placing wagers against the house.
Robinhood also claims prediction markets fall under the umbrella of Purpose and Use cases – prediction markets are often utilized for hedging and information aggregation, providing insights into public sentiment on various events. Whereas sports betting primarily serves as a form of entertainment and gambling.
The definition of “sports betting” has been closely scrutinized in recent years, in particular around the legality of Daily Fantasy Sports (DFS) products that resemble player prop parlays, sweepstakes-based betting that has a “no purchase necessary” dual-currency system, and now with these sports prediction markets.
Some have said that the nature of sports betting boils down to three simple questions:
Can users risk real money?
Does the profit or loss of that money depend on their sports predictions being correct?
Can users win real money and withdraw profits from their sports-based predictions?
The answer to all three of these questions is “yes” with Robinhood’s sports prediction markets, and therefore many would argue that it is a form of sports betting. But at least for now, Kalshi and Robinhood’s offerings are live and operating in states that haven’t legalized sports betting.
And with more regulatory scrutiny likely coming, it’s worth noting that in January, Kalshi added Donald Trump Jr. as a “strategic advisor.” Then in February, President Trump nominated Kalshi board member Brian Quintenz to become the new chairman of the CFTC, which for now is led by “Acting Chairman” Caroline Pham. Quintenz previously served as commissioner of the CFTC from 2017 to 2021.
Do Robinhood and Kalshi follow standard Responsible Gaming guidelines?
Robinhood's framing of sports prediction markets as trading activities rather than gambling has implications for responsible gaming practices. Traditional sportsbooks implement responsible gaming measures, including self-limiting tools, self-exclusion options and resources for problem gambling. As of now, Robinhood has not explicitly adopted standard responsible gaming guidelines for its prediction markets, possibly due to its classification of these activities as trading rather than gambling.
Meanwhile, Kalshi CEO Tarek Mansour announced this week the platform is debuting a “Consumer Protection Hub” that will include “features like deposit caps, trading breaks and voluntary opt-outs”. These features, he said, will work in tandem with Kalshi’s “market surveillance team” and regulatory systems.
The term “responsible gaming” is not in the announcement, but the features are essentially identical to those offered by regulated sportsbooks. All major operators currently offer deposit and time limits as well as self-exclusion tools. Mansour also announced that Kalshi is partnering with integrity monitoring service IC360 for its sports contracts. IC360’s data will enhance Kalshi’s “ability to prevent bad actors” and report them to sports leagues and regulators.
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