Robinhood is making a major play in the emerging prediction markets space, launching a new hub in partnership with Kalshi that will allow users to trade on the outcomes of events, including the upcoming men’s and women’s NCAA basketball tournaments.
The popular platform with retail investors announced the feature Monday, just a few days before the tournament, which is projected to attract over $3 billion at legal US sportsbooks.
Robinhood’s jump into sports predictions brings the opportunity to have a financial stake in March Madness to all 50 states.
Kalshi-Robinhood partnership, take 2
The in-app-only features will allow customers in 50 states to trade contracts on the target federal funds rate for May, as well as predict whether college basketball teams will advance in March Madness. It marks significant expansion for sports-related event contracts, a rapidly growing but controversial product that has drawn scrutiny from regulators, lawmakers, and gambling industry stakeholders.
“We believe in the power of prediction markets and think they play an important role at the intersection of news, economics, politics, sports, and culture,” JB Mackenzie, VP & GM of Futures and International at Robinhood, said in a statement. “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.”
Unlike traditional sportsbooks, which are subject to state-by-state licensing requirements, taxation, and responsible gaming regulations, Robinhood’s prediction markets have few regulatory guardrails. Critics, including professional sports leagues and state gaming regulators, argue that these markets operate as sports betting in disguise, bypassing the safeguards and oversight that legal sportsbooks must adhere to.
Kalshi had previously attempted to roll out similar markets for Super Bowl 59, but Robinhood pulled them following a request from the Commodity Futures Trading Commission to pause while the agency reviewed its processes. Nevada gaming regulators separately ordered Kalshi to remove its event contracts from the state, classifying them as unlicensed sports betting.
Regulatory uncertainty and industry pushback
The CFTC is actively reviewing the legality and structure of event-based contracts. The agency has scheduled a roundtable for later this month, described by acting Commissioner Caroline Pham as the “first major step in establishing a holistic regulatory framework” for these emerging markets.
Kalshi, a federally registered event contract exchange, won a court decision against the CFTC last year that paved the way for millions wagered on the US election.
The CFTC will decide whether sports predictions constitute gaming beginning with its upcoming roundtable later this month.
College sports integrity in the spotlight
The introduction of March Madness prediction markets adds another layer to an ongoing national conversation about the integrity of college sports amid the expansion of legalized gambling. The NCAA has recently ramped up efforts to protect student-athletes from gambling-related harassment, launching a public awareness campaign ahead of the tournament.
Multiple ongoing investigations into college athletes and gambling have heightened concerns, with reports indicating that additional cases could emerge soon. While Kalshi and Robinhood maintain that their event contracts are federally regulated, critics point out that prediction markets lack many of the integrity safeguards in place for licensed sportsbooks, such as monitoring for suspicious betting patterns and direct collaboration with governing bodies.
Disrupting the sports betting market
Investment firms are closely monitoring the rise of prediction markets, with some analysts viewing them as a potential disruptor to traditional sports betting. Deutsche Bank recently flagged prediction markets as an emerging competitive threat, noting that financial trading platforms could cut into sportsbooks’ market share if they continue operating under a lighter regulatory framework.
DraftKings, one of the largest regulated sportsbook operators, has filed an application with the National Futures Association, suggesting it is also exploring the launch of its own event-based trading product. CEO Jason Robins has acknowledged DraftKings’ interest in the space but has not provided details on a potential rollout.
