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A Bold New Offering: Election Contracts on Robinhood

The ever-disruptive Robinhood just cranked out a fresh tool for the daring—U.S. election contracts. Announced on Monday, Robinhood’s latest move lets users speculate on the outcome of the 2024 presidential race, marking a bold pivot from typical stonk flows to hardline election forecasts. With this rollout, Robinhood aims to tap into high-octane action that’s been buzzing with demand, targeting the thrill-seekers of the trading world who see politics as their next moonshot.

Now, don’t expect just anyone to ape into this market; Robinhood’s pulling from the OG rulebook. Only U.S. citizens who meet Robinhood’s “entry-tier” (think Level 2/3 options trading or margin greenlight) get access to these contracts. So, while the gates open wide to millions, Robinhood’s asking for some skin in the game for users angling to put their takes on the table.

Robinhood’s Main Rival: Kalshi’s Big Flex

Robinhood’s late entry fires up a hot market already claimed by Kalshi, a crew hustling hard to dominate political betting. Kalshi scored a major W when a U.S. federal appeals court recently OK’d its election contracts despite the Commodity Futures Trading Commission (CFTC) pushing for a ban. Kalshi CEO Tarek Mansour’s team didn’t just stop at the legal win—they’re now topping app charts, outperforming massive apps like Facebook and Uber, Mansour told CNBC. “We’re aiming for number one across the entire app store by election day,” he said.

Kalshi, with its robust liquidity, has become a whale pool; big spenders can toss in millions without batting an eye. For the heavy hitters, the options are immense. Meanwhile, Robinhood’s contracts are more conservative—users can drop around $10k max before the price gets twitchy. “On Robinhood, you can place around $10,000 before impacting the price, but on Kalshi, you can bet millions without affecting market movement,” Mansour explained.

The Setup: Robinhood’s Contracts with a Twist

Robinhood’s election contract setup doesn’t allow multi-candidate backing. Traders pick a single candidate, buying a “Yes” contract if they’re sure on the win, capped at $1.00 each. If the call’s right, users pocket $1.00 per contract; if not, they get zero. And unlike regular trades, Robinhood finalizes payouts only after Congress certifies the results on January 6, with payment day pegged for January 8, 2025. If users change their mind mid-race, they can flip their “Yes” contract to “No,” giving room to hedge or lock gains as the plot thickens.

Prediction Markets Rising: Where Robinhood Fits In

Robinhood’s launch rides a fast-growing trend, with prediction platforms like Interactive Brokers, Polymarket, and PredictIt also competing for election-action addicts. Polymarket prices its contracts based on probabilities, letting U.S. users make wagers on not just politics but key economic events as well.