Brokerage Firm Robinhood Considering Sports Betting Industry

A recent comment by Robinhood CEO Vlad Tenev raised eyebrows after the 37-year-old mentioned his firm may explore event contracts in the sports betting realm.

Event Trading

Election betting became a hugely popular and controversial subject during the presidential battle between Donald Trump and Vice President Kamala Harris. Firms like Polymarket and Kalshi offered contracts on both candidates that could be traded like futures commodities.

Despite the objections of the Commodity Futures Trading Commission (CFTC), a court ruled that election contracts were allowed. “A district court in D.C. made a decision just over a month ago, and we did appeal to the court of appeals for a stay on the actual contracts. Both were denied. We respect those decisions, and we will regulate those markets as best we can,” said CFTC Chairman Rostin Benham.

In Robinhood’s inaugural investor day, its CEO, Vlad Tenev, mentioned it may be contemplating a move into the sports betting arena. “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,” he said.

From Elections to Sports

Robinhood entered the contracts game in October, just a month before the November 5th election, and facilitated 500 million traded contracts in one week. In a press release, Robinhood said, “We believe event contracts give people a tool to engage in real-time decision-making, unlocking a new asset class that democratizes access to events as they unfold.”

The shift from election contract trading to sporting events could be a fairly seamless transition with a far shorter window for the contracts to become due. But there is also speculation the company could use its online trading platform to add a sports betting platform and become another mobile sportsbook to enter the industry.

In the contracts event trading scenario, bettors bet against each other as opposed to a traditional sportsbook where they bet against the house. Unlike sports betting, where odds and point spreads are locked in the moment a bet is made, event contracts are dynamic and can go up or down depending on current events.

Could Robinhood Be a Contender?

Analysts from JMP Securities stated Robinhood’s journey to becoming a bona fide sportsbook like Caesars or DraftKings would be “incredibly hard to start from scratch” based on the number of obstacles the company would face. Everything from creating or acquiring the technology to engineering the dashboard aesthetics and building backend support and infrastructure could be a bridge too far for the trading company.

The JMP analysts believe the more expedient and prudent path would be for Robinhood to build a sports events trading company, paralleling the election trading platform they built, which would also diminish the “risks associated with traditional sports betting.”

The company recently unveiled a technological upgrade to its trading platform called Robinhood Legend. “These new trading tools are powerful. They’re well designed, and I think customers are really going to like them,” Tenev said.

“We don’t want to just serve active traders. We want to grow wallet share with our customers; we want to help them build wealth,” Tenev added.

These new technological advances in the company’s platform may be a precursor to Robinhood exploring more seriously the sports betting realm in whichever manifestation it takes.