You know, Wall Street is buzzing, and it’s not just about the usual tech giants. Robinhood, the popular trading app, has been riding a massive wave of success, especially in its prediction markets. This booming interest has the company looking across the pond. It wants to bring its unique style of event betting to countries outside the United States.
J.B. Mackenzie, Robinhood’s Vice President and General Manager for Futures and International, spilled the beans to Bloomberg. He made it clear that taking these prediction markets global is definitely on their radar. In fact, they’ve already started talking with international regulators. The UK’s Financial Conduct Authority, or FCA, is one of the key groups they’re chatting with.
The big question for Robinhood is how to set up these markets abroad. In the U.S., these contracts are often seen as “futures” or “swaps,” falling under the watchful eye of the Commodity Futures Trading Commission (CFTC). But in other places, people might see them more like gambling. Mackenzie highlighted this difference, asking, “Where is the swap oversight, say, in the UK? That’s a question we’ve asked the FCA, how do we do it?” The firm is keen to make sure everything is properly regulated and compliant in every new market.
Robinhood, based in Menlo Park, California, sees a real hunger for these services in the UK and Europe. The company already offers stock and crypto trading there, having launched in late 2023. The timing seems right for a new push.
Betting on Tomorrow
The prediction market craze really picked up steam during the 2024 U.S. presidential elections. Platforms like Kalshi and the crypto-based Polymarket saw billions of dollars wagered. Robinhood gets in on this action in the U.S. through partnerships with Kalshi and ForecastEx. Both of these are regulated by the CFTC.
Mackenzie explained that any global expansion would mean adapting to local rules. “Here in the United States, it’s a federally regulated product by the CFTC. We would have to figure out what that means in the UK or the EU, why they are designated that way, and what the regulatory rules are,” he said, hinting at the potential for gambling supervision.
Back in August, Robinhood beefed up its offerings. They launched a prediction market for NFL and college football. Users could trade on game outcomes through Robinhood Derivatives, again, working with Kalshi. This move followed Robinhood’s growth into crypto-related products.
Success Fuels Expansion
This news about global plans comes hot on the heels of some impressive numbers for Robinhood’s prediction business. On Monday, CEO Vlad Tenev shared on X that the platform has handled over 4 billion event contracts since its launch this year. A whopping 2 billion of those came just in the third quarter alone.
This good news sent Robinhood’s stock soaring. The company’s shares jumped over 8% on Monday, closing higher than the previous Friday. The HOOD stock on Nasdaq continued its climb on Tuesday, hitting a new all-time high of $142.48. That’s according to Google Finance data at the time of this writing.
While Robinhood has been processing these huge volumes, Kalshi recently outpaced Polymarket in monthly trading volume. However, Polymarket has plans to relaunch in the U.S. after sorting out its own regulatory issues.
Eyeing Market Share, Avoiding Trouble
Prediction markets aren’t always a walk in the park. They’ve faced criticism for letting people bet on ethically tricky topics. We’re talking about things like the spread of California wildfires or even the passing of Pope Francis. There have also been whispers of manipulation, like during viral events in the WNBA.
Mackenzie addressed these concerns head-on. He stated that Robinhood carefully picks the markets it offers from its providers to steer clear of controversy. “Just because something goes viral on social media doesn’t mean we’re going to offer it as a product,” he confirmed.
Expanding internationally could help Robinhood grab a bigger piece of an increasingly competitive market. Rivals like Polymarket, FanDuel, Underdog, and CME Group are also getting into sports predictions. Mackenzie reiterated Robinhood’s main goal: “Our focus is to make sure it’s a product compliant with the regulation everywhere.”
Sources:
Bloomberg
X (Vlad Tenev)