Robinhood and Kalshi Unveil New College Basketball Prediction Market
Robinhood, in collaboration with Kalshi, has introduced a prediction market for college basketball tournaments, enabling users to trade event contracts based on game outcomes.
In a move to further engage in prediction markets, Robinhood has partnered with Kalshi, allowing fans to trade on college basketball games. Instead of merely filling out a bracket, users can now buy and sell event contracts, with values moving in cents according to the market’s assessment of each team’s odds.
In a blog post dated Monday, March 17, Robinhood announced that at its launch, this new prediction market hub “will empower customers to trade contracts based on the anticipated upper limit of the target Fed funds rate for May, along with the men’s and women’s College Basketball Tournaments.”
“Now, you can trade on the outcomes of every matchup in both the men’s and women’s college basketball tournaments, including the final championships,” stated the Menlo Park-based company on a dedicated webpage. Users holding winning contracts at the settlement will receive a payout of $1 per contract, while losing contracts will hold no value.
Functionality of Robinhood’s Prediction Market
Robinhood reassures users that there are no hidden tricks: if a contract is listed at 53 cents, this indicates the market estimates about a 53% likelihood of that outcome occurring. Users also have the option to sell their positions before an event concludes, allowing them to secure profits or minimize losses based on price fluctuations.
Each event contract is designed in a straightforward yes-or-no framework, akin to other prediction marketplaces like Polymarket. “Each contract you possess will pay out $1 if it resolves in your favor and $0 otherwise,” Robinhood clarifies in its FAQ section.
Users may choose either the “Yes” or “No” side for a particular contract, but cannot hold both sides for the same event. However, they can manage multiple positions across various matchups. The platform also shows open interest, indicating the number of active contracts held by users to illustrate market activity.
Robinhood will impose a commission of $0.01 per contract per side, with the brokerage executing the transactions potentially applying additional fees, according to the company. The brokerage titan notes that its event contracts are governed by Commodity Futures Trading Commission regulations and are being offered in partnership with Kalshi, a competing prediction market platform that lets users wager on elections, news events, and entertainment topics.
Potential Risks
Although Robinhood’s expansion into prediction markets appears promising, the domain has been fraught with controversies, particularly surrounding disputes over market resolutions.
Polymarket, one of the leading prediction markets by trading volume, has frequently faced backlash over its resolution methodology. One notable instance involved a market titled “Will Israel invade Lebanon in September?”
On the evening of September 30, Israel initiated military actions in Lebanon to push back Hezbollah forces from the border. While major news outlets largely labeled the incident as an “invasion,” suggesting that the market should resolve to “yes,” it ultimately concluded as “no,” leading to outcry from traders.
The decision centered on Polymarket’s stringent interpretation of its rules. Although Israeli forces entered Lebanon, some argued that an “invasion” necessitated an official declaration or an attempt to seize and hold territory—criteria that had not been explicitly met by Israel. Despite the widespread media characterization of the situation as an “invasion,” the market ultimately ruled that the conditions for a “yes” outcome were not fully satisfied.
Robinhood’s entry into event contracts is part of a wider movement among financial platforms to provide novel trading options beyond traditional stocks and cryptocurrencies. Additionally, this isn’t Robinhood’s first foray into prediction markets, as they previously launched a service before the November elections and subsequently announced a market for the Super Bowl outcome. However, in February, Robinhood rescinded this offering after the CFTC directed the firm to “not permit customers to access” sports event contracts.
At that time, Robinhood expressed disappointment, noting that it had been in “regular communication with the CFTC regarding our intentions and plans to offer this product” prior to its launch.