Zinger Key Points
- The CFTC is reviewing whether sports-based event contracts should be classified as financial instruments or regulated sports betting.
- Robinhood has previously explored event-driven trading, including bets on U.S. elections and an expansion into futures and index options.
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Retail investment platform Robinhood Inc. HOOD is diving into the world of event-driven trading, now offering its users the chance to speculate on the outcome of the upcoming Super Bowl.
What Happened: Starting this week, Robinhood clients throughout the United States can access contracts through the Kalshi exchange, allowing them to place trades on which team will take home the championship trophy.
This move indicates a broader strategy by Robinhood to incorporate real-world events into its trading options, expanding beyond traditional stocks and crypto.
The company has publicly stated that it sees an opportunity to cater to the growing overlap between investor interest, news, sports and entertainment, Bloomberg reported.
This foray into sports event contracts mirrors similar offerings by other platforms, such as Crypto.com.
The growing presence of these types of contracts has prompted a regulatory review by the Commodity Futures Trading Commission, raising significant questions about the nature of these products.
Specifically, authorities are examining whether these contracts, focused on sports outcomes, are in fact a form of gambling, and therefore should be subject to the same regulations as online sports betting.
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The CFTC's findings are expected after the Super Bowl on February 9th, so it is not currently known whether there will be changes in the future.
Robinhood's entry into event contracts is not a novel move for the company. They previously allowed traders to place wagers on the results of the U.S. presidential election.
This offering fits within their wider strategy of broadening their investment products, as they recently also added futures trading and index options to their platform back in October.
What’s Next: Robinhood's CEO, Vlad Tenev, had previously mentioned plans to introduce additional event-based products, with an emphasis on sports during a previous investor day.
The Super Bowl event contracts will give Robinhood users the ability to place a trade on the Kansas City Chiefs or the Philadelphia Eagles.
By partnering with Kalshi, Robinhood will be able to allow its users to speculate on the outcome of the big game.
They appear to be attempting to become a major player in both the traditional financial markets and also this new sector of event-driven speculative investing.
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