Robinhood launches Harris-Trump election betting market

Topline

Retail investing platform Robinhood launched a program on Monday that will allow users to bet on the outcome of the U.S. presidential election, tapping into a growing market that is heavily favoring former President Donald Trump next month.

Robinhood users can receive a payout of up to $5,000 if they select the winning candidate.

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Important facts

Robinhood announced that US residents will be able to buy derivative contracts betting on whether Trump or Vice President Kamala Harris will win on Election Day. The price ranges from $0.02 to $0.99 and is close to the market's implied percentage probability of victory for each candidate, with a payout of $1 if the user correctly selects the next president.

Users can purchase a maximum of 5,000 election contracts, company spokeswoman Christina Trejo told Forbes, meaning Robinhood users can receive a payout of up to $5,000 if they choose the winning side.

The Robinhood presidential election betting market hours will slowly increase leading up to next Tuesday's election. Trading will be open from 8:00 a.m. EDT to 8:00 p.m. EDT the next two days before opening almost continuously from Sunday to Friday, November 8th.

The contracts will be paid out from January 7th to 8th, 2025.

Important background

Robinhood is perhaps the best-known company to launch election betting, joining prediction market firms Polymarket, Kalshi and PredictIt. Election betting has become a major talking point in this presidential election and was praised by Trump earlier this month, although the regulator Commodity Futures Trading Commission has expressed concerns that the bets could “jeopardize election integrity” by potentially offering voters a perverse incentive to to support a particular candidate based on their bets, even though a federal court recently ruled against the CFTC in a case against Kalshi. Unlike Kalshi, PredictIt and Robinhood, the blockchain-based Polymarket operates overseas and only accepts bets from non-US residents. This means there are no relatively low limits for individual users and a French citizen will have almost $30 million if Trump wins on Polymarket.

Big number

62%. According to the website Election Betting Odds, these are the odds of a Trump victory that are priced into the major betting markets. That's more than poll-based prediction models like FiveThirtyEight, which gives Trump a 54% chance of winning, and Nate Silver's Silver Bulletin, which gives Trump a 52.9% chance.

tangent

So if the Robinhood market starts with a 62 percent chance of a Trump victory, that means users could buy Trump contracts for $0.62 apiece and Harris contracts for $0.38, where they could earn $1 apiece if their choice becomes president, a net return of about 60% on investment if Trump wins, and 160% if Harris wins.