Robinhood Investing App Enters Election Betting Arena

With Election Day about a week away, Robinhood announced it’s the latest investing platform to throw its hat into the political wagering ring.

Robinhood, the company behind a mobile investing application that’s highly popular with millennials and Gen Z, said today it started offering contracts on former President Donald Trump (R) and Vice President Kamala Harris (D) to a select number of clients.

Customers must apply and meet certain criteria to be approved for an RHD account, including being a U.S. citizen and more. Once approved, customers will be able to trade based on their prediction for ‘who will win the 2024 presidential election,’” according to a statement issued by the brokerage firm.

In addition to US citizenship, Robinhood clients wanting to purchase event contracts on Harris or Trump must be approved for margin investing and Level 2 or 3 options trading. The financial services firm didn’t comment to this effect, but the citizenship mandate may have been prompted by some foreign market participants flooding other election wagering platforms, potentially skewing the reality of traditional political polling.

Robinhood Using Familiar Election Betting Playbook

As is the case with the established players in the political betting arena, Robinhood isn’t booking wagers in a traditional sense.

On Robinhood and competing political betting platforms, traders purchase what are called event contracts with binary outcomes.

“An event contract is a type of financial derivative that allows traders to speculate on the outcome of a specific event. These contracts are generally structured around ‘Yes’ or ‘No’ outcomes, and fluctuate in price based on the projected outcome of the event,” added the company. “Event contracts then pay out if the position held matches the correct outcome of the event (for example, which candidate will win the 2024 presidential election); otherwise, they expire worthless.”

Election Betting Popular Among Brokerage Firms

News of Robinhood getting into election betting arrived six weeks after rival Interactive Brokers announced similar plans. That trading platform and Kalshi are currently attempting to stave off a legal challenge from the Commodities Futures Trading Commission (CFTC) to offer political bets.

Should it be allowed to proceed with offering event contracts on the 2024 presidential election and expand related offerings in the future as it indicated a desire to do, Robihnhood could benefit and the political wagering space could gain mainstream momentum because the brokerage firm has 24.2 million funded customers, 11.8 million of which are considered active on a monthly basis.

Robinhood’s Harris/Trump contracts will be priced at two cents to 99 cents apiece with $1 being the highest price the derivatives can trade. Clients can buy up to 5,000 election contracts.