Robinhood challenges Polymarket with new regulated prediction markets hub

Robinhood has unveiled a prediction markets hub within its app, signaling its full embrace of the emerging sector. In an announcement on its website, the electronic brokerage platform said the hub will allow users to trade on the outcome of real events.

According to the firm, its decision to launch a standalone hub for prediction markets is to allow its customers to engage with events that interest them. The firm noted that its customers can now trade on the biggest events within a regulated environment.

Speaking about the new product, the VP and GM of Futures and International at Robinhood, JB Mackenzie, said that the company believes in the power of prediction markets and expects it to play a role at the intersection of news, economics, politics, sports, and culture.

He added:

“We’re excited to offer our customers a new way to participate in prediction markets and look forward to doing so in compliance with existing regulations.”

The hub is expected to feature contracts focusing on the upcoming college basketball tournaments and the potential upper limit of the US Federal Reserves fund rate by May. For US customers, the hub and its contracts will be available through KalshiEX, a prediction markets platform regulated by the US Commodities and Futures Trading Commission (CFTC).

Robinhood is bullish on the Predictions market

Meanwhile, Robinhood did not just launch a prediction markets hub; the firm also published a policy on the sector to show its bullish stance. According to policy, prediction markets are the best way to aggregate information and should be allowed to thrive.

The firm said that these platforms have several advantages, including being more accurate about the outcome of future events because users financially back their predictions. It highlighted other benefits, including enabling hedge their risks, reducing uncertainty, and allowing traders to benefit from speculation.

It said:

“By allowing individuals to buy and sell contracts tied to specific outcomes – known as “event contracts” – prediction markets help reduce uncertainty by providing real-time probabilities that reflect the collective wisdom of participants.”

With Robinhood highlighting the benefits of the prediction markets, it called on regulators and policymakers to support the emerging sector and allow retail traders to participate instead of imposing rules that will shut out retail customers.

Is Robinhood coming for Polymarket crown?

Robinhood’s decision to launch a predictions market hub is not entirely surprising. The brokerage platform first tried event-based derivatives in 2024 when it launched a contract allowing US users to bet on the Presidential election. It also attempted to create contracts for the Super Bowl but had to cancel them in response to a request from the CFTC.

This explains why Robinhood US users can only access the hub through Kalshi, a position that may change soon as the firm said it has been engaging the regulator.

With Robinhood now fully permanent, the platform seems ready to capitalize on traders’ growing interest in betting on real-world events. It will compete with other platforms, including blockchain-based Polymarket, by entering this sector.

Polymarket is synonymous with the rise of event-based derivatives trading. Its US presidential election contracts generated massive interest in 2024, leading to monthly volume peaking at $2.63 billion in November. However, its volume has declined since then, falling to $835 million in February even as the platform and its competitors pivoted to other sectors, including sports, politics, and economic events.

However, Robinhood’s venture into the space, with its wide retail user base and crypto exposure, has led many to speculate that other prediction markets will suffer. For Robinhood, the hub is an expansion of its products for retail traders.

Cryptopolitan Academy: Tired of market swings? Learn how DeFi can help you build steady passive income. Register Now