Robinhood wants a piece of the March Madness action

The line between trading futures and gambling is blurring. Robinhood yesterday unveiled a prediction markets hub inside its app that allows users to bet on the likelihood of certain events, ranging from financial policy outcomes to sports results.

• The company says its hub will initially take bets on every matchup in the upcoming men’s and women’s March Madness tournaments, as well as bets on the upper bound of the Federal Reserve’s target interest rate announced in May.
• The hub is powered by Kalshi*, a US-regulated exchange that won the right to legally offer event contracts last year.

Back in the game

Yesterday’s move marks Robinhood’s second attempt at entering the sports contracts market. The trading giant had a similar deal with Kalshi to offer event trading contracts on who would win February’s Super Bowl, but the service was pulled after less than a day following pushback from US federal regulators over its similarity to gaming.

Robinhood says it’s “been in close contact with the CFTC over the past several weeks,” but didn’t indicate what prompted another attempt at the space.

Zoom out: Event contracts have exploded in popularity since Kalshi’s legal victory last September opened the door for other US companies like Robinhood and Interactive Brokers to also host such activity. ~$150 million was bet on the 2024 presidential election via Kalshi, per the company.

*Disclaimer: Kalshi is a paying sponsor of The DONUT.