Robinhood is expanding its service to attract more users by introducing investment contracts tied to the outcome of November's U.S. presidential election, according to an Oct. 28 statement.
Event-based derivatives trading allows investors to speculate on specific events, such as election results or economic policy announcements, without purchasing the related assets. The company says its deal will enable people to participate in real-time decision-making and unlock new asset classes that democratize access as events unfold.
Robinhood said the election-related contract will be available for trading until Nov. 8, with prices varying between $0.02 and $0.99 depending on market sentiment. As Election Day approaches, the winning candidate's contract value increases, with the amount paid closer to $1.
The company continued that each trader's winnings will be paid out on January 8, 2025 after the presidential results are certified by the US Congress on January 6, 2025.
This product is rolling out to a limited number of US-based customers starting today.
Increasing competition for Polymarket
Robinhood's entry into the electoral contract market brings more competition to a field dominated by decentralized betting markets, polymarkets. Other platforms, such as Solana's BET and dYdX's Trump Prediction Market Perpetual, offer election-related event-based options, creating an increasingly competitive market.
Meanwhile, Polymarket has recently faced increased scrutiny over unproven concerns about market manipulation. Market players have noted an increase in large bets supporting Republican candidate Donald Trump. However, it is usually difficult to prove that market participation is due to manipulation rather than pure free market mechanisms.
CEO Shane Coplan has addressed the allegations, defended Polymarket's integrity and dismissed concerns about manipulation, but some market observers remain skeptical. He said:
“Polymarket is strictly nonpartisan. On some days, you might be accused of being a Democratic Party operative or a MAGA. Unfortunately, this story is not all that appealing. We believe that prediction markets are desperately needed by the public. I'm just a market geek who wants to provide an alternative data source.
As of the latest data, Polymarket's election results market has approximately $2.5 billion in trading volume. Current odds give Trump a 65% chance of winning, while his opponent Kamala Harris has a 35% chance of winning.
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