Election betting on prediction markets

Despite recent confrontations with regulators, election markets can provide more accurate insights into public sentiment than polls, according to industry observers.

In May 2024, the United States Commodity Futures Trading Commission (CFTC)proposed a rule to ban derivatives used to bet on the outcome of US elections and other major real-world events.

The CFTC’s proposal drove US-based regulated prediction market platform Kalshi to take the commission to court. Columbia District Judge Jia Cobb rejected the CFTCs proposal, stating that “Kalshi’s contracts do not involve unlawful activity or gaming. They involve elections, which are neither.”

The CFTC attempted to appeal the decision, with an appellate court even imposing a temporary block on the market, but the court denied the CFTC proposal on Oct 2, and the platform has resumed trading.

Regulators’ initial concern was over the potential for manipulation, but some industry observers state that prediction markets may make better metrics of public opinion than traditional polls.

Harry Crane, a statistics professor at Rutgers University,commented on the CFTC portal’s proposal by claiming that “event contract markets are a valuable public good for which there is no evidence of significant manipulation or widespread use for any nefarious purposes that the Commission alleges.”
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Robinhood will begin rolling out presidential election event contracts on October 28 through Robinhood Derivatives

Two weeks ago, we hosted hundreds of Robinhood customers in Miami at our inaugural HOOD Summit. There, we announced Robinhood Legend, and that index options and futures would be coming soon, offered by Robinhood Derivatives, LLC (RHD). Now RHD is following up on this announcement with the launch of presidential election event contracts, ahead of the November 5 general election.

Event contracts allow customers to trade on the outcome of specific events, such as whether a candidate will win an election. Robinhood’s presidential election event contracts will begin rolling out to a limited number of customers today. Customers must apply and meet certain criteria to be approved for a RHD account, including being a U.S. citizen and more. Once approved, customers will be able to trade based on their prediction for “who will win the 2024 presidential election.” There will be two contracts to choose from–one for Kamala Harris and one for Donald Trump.

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.

To learn more about presidential election markets visit go.robinhood.com/election and our Help Center.

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pmbug said:

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The French trader, known as Théo, who wagered heavily on Trump winning the Electoral College (and the popular vote) made almost $50 million from his bets on Polymarket.
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