Commission-free stock-trading app Robinhood has gotten into the election “betting” game—or, strictly speaking, trading of contracts on electoral futures. As of Monday, Robinhood users have been given the option to trade contract shares whose value depends on whether Kamala Harris or Donald Trump becomes the next US President.
Each contract a user owns of the winning candidate will pay out $1 once the election is certified. Prices of contracts range from $0.01-$1.00 based on demand and projections. Unlike most of its markets, Robinhood is charging $0.01 commission per contract.
Robinhood is the latest contract trader to jump into politics. It comes on the heels of a legal victory for the companies when it comes to election markets. The Commodity Futures Trading Commission was looking to stop companies like Robinhood from participating in election markets. But, the CFTC lost a recent legal battle with contract trader, Kalshi, which is currently being appealed.
How presidential trading markets works
Trading Robinhood presidential election contracts is open to everyone.
To make the contract trade, users must be a US citizen. They must also apply and meet certain criteria to receive a Derivatives account.
If approved, users can trade based on their prediction for “who will win the 2024 presidential election.”
There will be a contract option for Kamala Harris and one for Donald Trump.
Trading takes place from 8 a.m.-8 p.m. ET until Election Day on Nov. 5. Once the election is certified in January, the payouts for winners will take place. Users may only buy contracts for one of the two candidates.
Elections are a new market for Robinhood
Jumping into the election is a slight shift for Robinhood.
The online company allows users to buy and sell a variety of assets based on company events taking place in the world.
That includes:
- U.S. exchange-listed stocks and exchange-traded funds (ETFs)
- Options contracts for U.S. Exchange-Listed Stocks and ETFs
- American Depositary Receipts (ADRs) for over 650 globally-listed companies
According to a Robinhood press release, getting into the presidential election is part of the company jumping into more futures markets.
“We’ve heard from our customers that having access to the market in real time is essential – it’s why, for example, we launched 24/5 trading and recently announced our plans to launch futures trading in the coming months. 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.”
Trading companies win legal battle for election markets
The CFTC was looking to keep these trading companies from getting into the election market.
However, Kalshi filed a federal lawsuit against the CFTC last November. This was on the heels of the CFTC barring Kalshi from offering event contracts for the 2024 elections. They deemed it to be gambling and contrary to the public interest.
On October 2, The United States Court of Appeals ruled that these exchange companies were operating legally with their election markets.
The CFTC is appealing the ruling, but that will not be decided by Nov. 5, allowing the companies to continue their presidential election contract trading.
Shortly after the ruling, Interactive Brokers launched a variety of political contracts. Now, Robinhood is following suit.
Trump contracts priced ahead of Harris
With just a few days before Election Day, Donald Trump is ahead of Kamala Harris when it comes to contract prices.
As of Thursday afternoon, Trump contracts were notably more expensive than Harris contracts.
- Robinhood: Trump – $0.60, Harris – $0.43
- Kalshi: Trump – $0.59, Harris – $0.41
- PredictIt: Trump – $0.55, Harris – $0.48
These prices aren’t to be considered odds by a bookmaker, just a market perception based on the trades taking place.