TLDR
- Robinhood is exploring expansion of its prediction markets to UK and Europe following US success
- The company faces regulatory classification challenges as these markets are treated as futures in the US but may fall under gambling laws elsewhere
- Over 4 billion event contracts have been traded on Robinhood’s platform, with more than half in Q3 alone
- Robinhood is in discussions with the UK Financial Conduct Authority (FCA) about regulatory compliance
- Prediction markets have gained popularity, with decentralized platform Polymarket processing billions in trades during the 2024 US election
Robinhood is planning to take its prediction markets global after seeing strong user adoption in the United States. The discount brokerage, known for democratizing stock trading, now aims to bring its event-based trading platform to the United Kingdom and European markets.
The company launched its Prediction Markets Hub earlier this year in the US. This platform allows users to trade on outcomes of real-world events, from interest rate decisions to sports results.
JB Mackenzie, Robinhood’s vice president and general manager of futures, told Bloomberg that the UK and Europe show the strongest demand for prediction market products. “We’re definitely looking to offer it globally, and my goal or focus is to make sure it’s a regulatory-compliant product everywhere we go,” Mackenzie said.
The growth of Robinhood’s prediction markets has been impressive. CEO Vlad Tenev recently shared on X that the platform has facilitated more than 4 billion event contracts, with over half of that volume occurring in the third quarter alone.
Regulatory hurdles present the main challenge for international expansion. In the United States, prediction markets are treated as futures products and regulated by the Commodity Futures Trading Commission (CFTC).
Regulatory Considerations
However, other jurisdictions may classify similar products under gambling laws. Robinhood is currently in discussions with the UK Financial Conduct Authority (FCA) to determine how such products could be offered locally.
“The question would be where is swap oversight, let’s say in the UK? That’s a question that we’ve been asking the FCA, how do we work it?” Mackenzie explained to Bloomberg.
Unlike many competitors in the space, Robinhood’s prediction market is built on traditional financial infrastructure rather than blockchain technology. The event contracts are executed through Kalshi, a CFTC-regulated derivatives exchange, and settled in US dollars.
This approach differs from decentralized prediction markets like Polymarket, which operate on blockchain networks and use smart contracts to automate trades and payouts. Polymarket, built on the Polygon blockchain, has reported billions in monthly trading volume.
The rise of prediction markets has been particularly evident during the 2024 US presidential election. Polymarket saw peak activity during November 2024 as traders speculated on election outcomes.
Market Growth and Competition
Ethereum co-founder Vitalik Buterin has commented on the phenomenon, suggesting that election cycles are just the beginning. He noted that “the broader concept is that you can use finance as a way to align incentives in order to provide viewers with valuable information.”
Polymarket’s increasing prominence in the space is evident from its recent reported valuation. The platform is weighing a potential deal that values the company at $9 billion, up sharply from its $1 billion valuation just months ago.
With Robinhood’s entry into prediction markets and its planned global expansion, the market could open to a much larger group of traders. Robinhood’s established user base and regulated status could help mainstream these products.
Robinhood continues to be active in crypto and blockchain sectors, offering digital asset trading and working toward tokenized stock offerings. The company’s international expansion plans represent its latest effort to diversify revenue streams beyond its core stock trading business.
The timeline for Robinhood’s international prediction market launch remains unclear as the company works through regulatory requirements in each target market. Robinhood’s representatives are actively engaging with overseas regulators to explore how localized versions of the product could be structured.
Robinhood’s event contracts through Kalshi currently allow users to speculate on outcomes ranging from economic data releases to geopolitical developments, similar to what’s available on decentralized platforms but with the backing of a regulated financial institution.
