Robinhood has teamed up with Kalshi to introduce a prediction market focused on the men’s and women’s college basketball tournaments, enabling users to trade contracts based on the outcomes of games.
Robinhood is making strides into the realm of prediction markets, collaborating with Kalshi to allow participants to trade on college basketball matchups. Rather than merely filling out brackets, sports fans can now engage in buying and selling event contracts, with prices shifting in cents according to market perceptions of each team’s likelihood of winning.
In a recent blog announcement, Robinhood detailed that the newly launched prediction market hub will enable users to trade contracts regarding what the upper limit of the target federal funds rate will be in May, alongside the imminent men’s and women’s College Basketball Tournaments.
“You can now trade on the results of every match-up in the men’s and women’s college basketball tournaments, including the championship finals,” the company said on a dedicated webpage. Those who hold winning contracts at settlement will earn a $1 payout per contract, while losing contracts will be worthless.
Understanding Robinhood’s prediction market
According to Robinhood, there are no hidden complexities: if a contract is listed at 53 cents, the market estimates roughly a 53% likelihood of that outcome occurring. Participants can also liquidate their positions before the event concludes, enabling them to realize profits or limit losses based on price fluctuations.
Each event contract operates on a straightforward yes-or-no basis, akin to other prediction markets such as Polymarket. “Each contract you possess will yield $1 if it resolves in your favor. It will yield $0 if it does not,” Robinhood clarifies in their FAQ section.
Users can opt for either the “Yes” or “No” side of a contract, but cannot hold both sides for the same event concurrently. However, they are permitted to take multiple positions across different matchups. The platform also highlights open interest—the total number of active contracts held by users—to give insight into market dynamics.
Robinhood charges a commission of $0.01 per contract per side, with additional fees possibly imposed by the brokerage executing the orders. The company states that its event contracts are regulated by the Commodity Futures Trading Commission (CFTC) and are offered in collaboration with Kalshi, another platform where users can place bets on elections, news events, and popular culture.
Potential concerns
Robinhood’s ambitions for broadening its prediction market offerings are still a bit unclear, as the space has encountered its share of controversies, particularly regarding market resolution disputes.
Polymarket, a leading name in the prediction markets by trading volume, has faced criticism multiple times concerning its resolution methods. One notable instance involved a market regarding the prediction of Israeli military action in Lebanon. On September 30, Israel initiated military operations, widely referred to as an “invasion” by major news outlets. However, the market ultimately settled as a “no,” leading to significant dissatisfaction among traders.
The ruling rested on Polymarket’s stringent interpretation of its own guidelines. While Israeli troops did enter Lebanon, some argued that an “invasion” necessitated an official declaration or an effort to seize territory—criteria that were not explicitly met. Despite media labeling the incident an “invasion,” the market ruled that it did not meet its standards for a “yes” outcome.
Robinhood’s entry into event contracts reflects a broader trend among financial platforms to provide innovative trading options beyond standard stocks and crypto. Furthermore, this isn’t Robinhood’s first foray into prediction markets; prior to the November elections, the company briefly rolled out its own service and later announced a market for the Super Bowl. However, in February, Robinhood retracted that offering after the CFTC instructed the company to refrain from allowing access to sports event contracts.
At that time, Robinhood expressed disappointment, indicating that it had been communicating regularly with the CFTC regarding its intentions and plans to provide this product ahead of the launch.