Robinhood Markets, Inc (NASDAQ: HOOD) CEO Vlad Tenev hinted at the company’s exploration into sports betting through event contracts during its first Investor Day in New York City on Dec. 4, 2024.
“We’re keenly looking into that space. Nothing to announce just yet, but it’s so important to our customers and in culture that we’re excited about it,” Tenev said.
This consideration follows Robinhood’s recent pivot into event contracts for the 2024 U.S. presidential election last fall, allowing users to speculate on election outcomes.
According to the company’s data, the election event contracts garnered 500 million contacts in their first week and created 500,000 funded futures accounts.
You can now bet on the election on Robinhood.
— Austin Rief ☕️ (@austin_rief) October 28, 2024
The stock market, betting markets, and crypto are all converging.
The degenerate economy is taking over. pic.twitter.com/iFBzVmenDv
Event contracts, which Robinhood has described as a “white space” product with untapped potential, represent a strategic pivot for the commission-free trading platform. The company plans to further capitalize on this momentum by launching a full-fledged futures trading product in early 2025—a move Tenev said could drive significant revenue growth.
“We plan to launch Futures in early 2025, which we believe represents a nine-figure revenue opportunity,” Tenev noted. While Futures will presumably focus on more traditional markets, such as those you can currently find on prediction market platforms like Kalshi and ForecastEx, their interest in sports-related event contracts suggests Robinhood could expand its offering to capture the cultural and financial appeal of sports betting.
Shares of Robinhood (NASDAQ: HOOD) rose by 3.5% following Tenev’s comments, reflecting investor optimism about the company’s innovative approach to expanding its product portfolio.
A bet on event derivatives
Although Robinhood’s October rollout of presidential election contracts fell under the oversight of the Commodity Futures Trading Commission (CFTC), it remains unclear whether potential sports-related event contracts could enjoy the same federal regulatory pathway. Sports betting in the U.S. is regulated at the state level, with each jurisdiction granting licenses and imposing its own rules through state gaming commissions.
“These are regulated event contracts offered through our FCM license, or Futures Commission Merchant, regulated by the CFTC,” Tenev said. “So, that said, we are interested in exploring all kinds of events. A lot of people have been talking about the potential for sports event contracts and taking that into the regulated space.”
The regulatory landscape for event contracts remains challenging, as highlighted by the ongoing legal battle between Kalshi, an event derivatives prediction platform, and the CFTC.
Having sat in at that conference I think people are overstating Vlad’s enthusiasm around the sports betting comment. It would also require a whole new set of regulatory licenses and hurdles. The company would be better suited focusing on other strategic priorities like Gold.
— Bear O’Shea (@YungSpinCo) December 5, 2024
The result of Kalshi v. CFTC could set important precedents for the future of events contracts, potentially affecting how Robinhood structures its offerings and which markets it can enter.
If Robinhood could successfully secure federal oversight for its sports contracts instead of pursuing state-by-state gambling licenses, it would redefine the future of event derivates in sports betting, transforming them from a gambling activity to a regulated financial product.
That is a big if.
Nevertheless, Robinhood’s potential expansion into new verticals represents its continued evolvement beyond its roots as a stock trading platform.
