Robinhood, HOOD, has launched U.S. presidential election derivatives

Robinhood, $HOOD, has launched U.S. presidential election derivatives.

Upstart broker Robinhood is diving into prediction markets, announcing on Monday that users can now trade on the outcome of the 2024 presidential election, which is just eight days away.

Robinhood users can trade contracts tied to Kamala Harris or Donald Trump, as long as they meet certain requirements, including being U.S. citizens. The trading will take place through Robinhood's Derivatives unit in collaboration with ForecastEx, operated by Interactive Brokers.

This move by Robinhood puts it into the increasingly crowded political prediction market, which gained momentum earlier this month after platform Kalshi won a significant legal battle against the Commodity Futures Trading Commission (CFTC), which had tried to block election outcome trading. The CFTC is appealing the decision. In response, Interactive Brokers quickly launched its own political contracts, including those related to the election.

Election markets have sparked controversy this year, with concerns that low trading volume could skew results. Last week, international platform Polymarket revealed that a single French user, operating four accounts, had spent millions on Trump contracts. However, an investigation concluded that the trading did not manipulate the market.

"We believe event contracts offer a tool for real-time decision-making, creating a new asset class that democratizes access to unfolding events," Robinhood said in a statement. For now, only contracts related to the presidential election will be available for trading.

It's important to note that prediction markets and gambling platforms do not use the same methodologies as traditional political polling and should not be seen as replacements for polls.