Robinhood (NASDAQ:HOOD), the popular stock trading application, announced a partnership with the prediction market Kalshi, enabling its account holders to trade on the outcome of the Super Bowl for the first time.
This collaboration will allow users to use funds from their brokerage accounts to bet on the winner of the upcoming game between the Eagles and Chiefs. The bets will be limited to the outcome of the game, rather than involving point spreads or other prop bets.
The companies are framing this new feature as "event trading" rather than betting or gambling, highlighting the distinction between sports betting, which is regulated by individual states, and derivatives trading, which falls under federal regulation.
Robinhood's statement emphasized its mission to democratize finance and recognized the potential to serve its customers' interests, which span markets, news, sports, and entertainment. The Pro Football Championship event contract is available on a regulated exchange in all 50 states.
While this move is seen by some in the traditional sportsbook industry as a potential threat, the immediate impact on the total money bet for the Super Bowl by major sportsbooks like FanDuel and DraftKings (NASDAQ:DKNG) is expected to be minimal. However, the longer-term implications could be significant if exchange-based trading expands to include point spreads, player props, and parlays.
Exchanges like Kalshi can offer lower "vig" or fees, as bettors trade against each other, unlike sportsbooks where bets are placed against the house, which carries inherent risk. Robinhood boasts approximately 24 million users, with 11 million active monthly, while Kalshi is a newer entity backed by venture capital firms such as Sequoia, Neo, Y Combinator, and Mantis VC, with Donald Trump Jr. recently joining as a strategic advisor.
In preparation for this Super Bowl market, Kalshi filed with the Commodity Futures Trading Commission (CFTC) last month, following a similar move by Crypto.com. Despite the CFTC's request for Crypto.com to halt its offering pending a review, the crypto exchange continued to list the market. With the CFTC's transition from a Democrat to a Republican majority, the regulatory body has not taken further action.
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