Robinhood has made a significant move into the prediction markets space by launching a dedicated hub that allows users to place wagers on March Madness basketball games through a partnership with Kalshi, the federally regulated event contract exchange.
The new feature, announced Monday, enables Robinhood customers to trade contracts on the outcomes of both men's and women's NCAA basketball tournament games. Unlike traditional sports betting, which is regulated state by state, Robinhood's prediction markets are available in 49 states, with Nevada being the only exception.
This effectively brings the opportunity to have a financial stake in March Madness to a nationwide audience, just as the American Gaming Association projects over $3 billion will be wagered at legal US sportsbooks on the tournament.
"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," said JB Mackenzie, VP & GM of Futures and International at Robinhood, 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."
Robinhood's prediction markets operate through Kalshi's infrastructure, which matches users with counterparties for each contract. Customers are charged a fee of two cents per contract, split evenly between Robinhood and Kalshi.
Tarek Mansour, CEO of Kalshi, told Front Office Sports: "March Madness is famous for its volatility; we're thrilled to add the excitement of prediction markets to this year's games and couldn't ask for a better partner in Robinhood to bring our vision to every American."
To participate, users must have an individual Robinhood investing account with either margin investing enabled or options trading approval. The service is available directly through the Robinhood app.
The March Madness contracts are just the beginning of Robinhood's prediction market ambitions. The platform has also introduced contracts to predict the Federal Reserve's target interest rate for May, with plans to expand into additional markets related to finance, politics, sports, and other events in the coming months.
This move marks Robinhood's renewed commitment to prediction markets after briefly testing the waters with a Super Bowl betting market earlier this year, which it withdrew following regulatory concerns from the Commodity Futures Trading Commission (CFTC).
The rollout comes amid ongoing regulatory scrutiny of prediction markets. The CFTC is actively reviewing the legality and structure of event-based contracts and has scheduled a roundtable discussion on sports-related prediction markets for later this month.
Nevada gaming regulators recently issued a cease-and-desist order to Kalshi, classifying its products as unlicensed sports betting, though the deadline was extended after the company retained legal counsel.
Major League Baseball has also petitioned the CFTC, advocating for prediction markets to face the same integrity standards as traditional sportsbooks like FanDuel and DraftKings.
The emergence of prediction markets is being closely watched by the traditional sports betting industry. Deutsche Bank recently identified these platforms as a potential competitive threat to established sportsbooks, noting they operate under a lighter regulatory framework.
Meanwhile, DraftKings has filed an application with the National Futures Association, suggesting it too is exploring entry into the event contract space.
According to a Robinhood spokesperson, the partnership with Kalshi is not necessarily permanent, implying the company could develop its own exchange or work with additional providers in the future.
As March Madness begins and millions of Americans engage with the tournament, Robinhood's entry into prediction markets represents a significant development in how people can financially interact with sporting events nationwide.