Robinhood Review (Are Robinhood Prediction Markets Legal?)

Robinhood trading explained — How the prediction markets work

If you’re new to Robinhood, the first thing to do is to learn how the prediction markets work.

Robinhood prediction markets feature Yes/No event contracts that represent real-world outcomes. You buy and sell these contracts based on your predictions, and they cost between $0.01 and $0.99. If the price is $0.60, for example, you can buy 100 event contracts for $60.

The price is based on supply and demand as traders buy and sell. That’s because Robinhood prediction markets are peer-to-peer (P2P), so there must be a sell for a buy order to execute, and vice versa. What Robinhood does is to match and facilitate the trade.

I always view the contract price as the probability of each event coming to pass. For instance, a $0.60 rate means 60% of the market believes the outcome will be true. Robinhood isn’t responsible for the price, which is why it’s not a betting platform. It’s unlike regular sportsbooks that set odds based on their own probabilities.

Event contract payouts

The payout for correct predictions on Robinhood is fixed at $1 per event contract. Therefore, if you purchase at $0.60 and the outcome turns out accurate, you receive a $0.40 profit. If it’s 100 contracts for $60, the gain becomes $40.

After buying contracts on Robinhood, I sometimes sell them before the event settles. You’re allowed to do this since it’s just a trade. If the price appreciates, I sell to get some early gains. Conversely, I can still sell if the price is depreciating to minimize loss.

Is Robinhood legal?

To be upfront, Robinhood is legal in the United States. While making this review, I confirmed that the site provides its prediction market service under a special arm: Robinhood Derivatives, LLC. The company is regulated by the Commodity Futures Trading Commission (CFTC), making it legal across the US.

Furthermore, I noted that Robinhood sources its event contracts from Kalshi or ForecastEX. Both third-party trading platforms are also regulated by the CFTC in the US. They strengthen the fact that Robinhood is legal and legit.

However, Robinhood’s prediction markets are unavailable in Maryland. If you’re in Nevada, you can trade event contracts in any category besides sports. In my opinion, these few limitations don’t affect the brand’s overall rating in terms of legality.

What is the Robinhood sign-up bonus?

The sign-up bonus at Robinhood is between $5 and $200 worth of stocks from different US companies. I got this reward after registering and linking my bank account, but unfortunately, it doesn’t apply to prediction markets. You can only use it on fractional shares of your selected company.

Not being able to use the bonus on prediction markets may appear like a downside. However, I don’t consider it a big deal since prediction market platforms usually don’t give welcome promos. When available, the offers are often minimal. To illustrate, during my Kalshi vs Robinhood review, I came across a sign-up bonus of $10 on the former site.

Other potential rewards on Robinhood

As you use Robinhood in the US, there are a few opportunities to get rewards. I’ve listed them below:

• Transfer bonus: Get back the fee paid when transferring assets to Robinhood. The maximum return is $75, and the assets must be worth at least $7,500 to qualify.
• Invite friends: Receive $5 to $200 in stocks for referring others. The cap here is $1,500 per year.
• IRA match: Receive up to 3% match on eligible IRA contributions every year.

The promos are commendable, but note that most won’t work on prediction markets. You can use them in trading stocks.

Explore Robinhood's sports prediction markets

Try economics market trading on Robinhood

Robinhood sports prediction markets

If you’re interested in sports prediction markets, Robinhood is a reliable trading platform to consider. I counted 10+ sports on the site, including all the popular leagues in the US. Here’s the list:

1. Pro football (NFL)

2. College football (NCAAF)

3. Basketball (NBA)

4. College basketball (NCAAB)

5. Pro hockey (NHL)

6. Pro baseball (MLB)

7. Boxing

8. Racing (Formula 1)

9. Soccer

10. Golf

11. Esports

When you select any category, you’ll see several games with different event contracts. During this Robinhood prediction markets review, my first trade was on an NBA game between the Nuggets and the Pacers. I believed the Nuggets would win, so I purchased 100 Yes event contracts for the team at $0.76. Eventually, they won, so Robinhood paid $100, and I made a $24 profit.

Prediction options

What predictions can you make when trading Robinhood sports event contracts? Well, I found a good list of options, including:

The options on Robinhood are more extensive than some other prediction market sites I’ve tested. Therefore, I highly rate the platform in this aspect of my review.

Live trading

On the Robinhood platform, you can trade sports event contracts while games are ongoing. The prediction markets won’t close until the events are officially over. I tried the live trading option for an NHL game between Philadelphia and Buffalo, and it still involved buying and selling Yes/No contracts.

However, I should mention that prices are more volatile when trading live sports prediction markets. It’s normal because traders will react to the real-time results. For instance, many may choose to sell their Yes contracts for the game winner if the team they’re backing is behind. So, if you want to trade live, always watch the market and react accordingly to protect your investment.

Politics prediction markets on Robinhood

In terms of politics, the primary niche on Robinhood is Elections. The platform features it as a separate section on the top tab, and the options let you speculate on poll results. From my checks, the focus is mainly on the US elections.

I traded event contracts to predict who’ll win mayoral elections in Miami and Jersey City. With these options, you’ll typically see several candidates. For instance, here were the contestants for the Jersey City mayoral polls at the time of my review:

1. James Solomon: $0.99
2. Bill O’Dea: $0.01
3. Flash Gordon: $0.01
4. Jim McGreevy: $0.01
5. Joyce Watterman: $0.01

Clearly, James Solomon is the market favorite as he has a 99% chance of winning. All other candidates have just 1%. Robinhood highlights the Yes contract price in support of each candidate, but you can click on the option to select No.

The market determines the price, and there are no fixed odds.

Other political options

Besides elections, I saw the following options for politics during this Robinhood prediction markets review:

Markets for culture predictions

Entertainment and climate lead the way for Robinhood culture prediction markets. Check out my findings in each section below:

Entertainment

The entertainment category lets you trade event contracts on movies, TV shows, music, gaming, streaming, people, and awards, among others. I found the section pretty extensive, as it covers aspects of the US entertainment industry. That said, the exact events you see will depend on what’s trending at the time.

While making this review, I bought event contracts for different Grammy and Oscar award categories. I also checked out the people section and made predictions on the most searched celebrities on Google and TIME’s Person of the Year.

Climate

From the description, you already know that this market is all about predicting weather conditions. These are the subcategories I spotted on Robinhood:

• Temperature
• Snowfall
• Rainfall
• Severe weather

In the Temperature section, I found options for predicting daily temperatures in cities like New York, Miami, and Los Angeles. Meanwhile, Snowfall and Rainfall have event contracts for whether rain will fall in different locations on a specific day or month. If you pick Severe weather, you can predict extreme weather conditions like tornadoes.

Economics event contracts

Based on my experience, the Economics category is one of the most extensive on Robinhood. I say that because it has seven subsections, including:

1. The Fed
2. Rent
3. Gas prices
4. Indicators
5. International
6. Macro
7. Energy

I tested the event contracts with predictions on Fed decisions, rate cuts, and fund rates. What I appreciate most are the Rent and Gas prices subcategories. They let you predict regular events, such as how much gas prices will be or how much rent will rise in different cities.

If you prefer options beyond the US, switch to the International tab. It has economic event contracts for other regions like Japan, Europe, Canada, Singapore, Mexico, Australia, and China.

Economics combos

You don’t have to always trade single Robinhood event contracts for economics. Like in the sports category, the platform supports combos. Therefore, you can combine multiple economy-related predictions in a single event contract.

To illustrate, here are some Fed combos I came across:

1. Federal funds rate: 25bp cut, Dissents: > 0
2. Federal funds rate: 25bp cut, Dissents: 0
3. Federal funds rate: No change, Dissents: > 0

If you pick Yes for the first, the contract will payout if the Fed cuts the rate by 25 basis points and at least one committee member dissents.

My user experience with Robinhood

Robinhood works on both web and mobile. Overall, the site has a simple design that I didn’t find challenging to use. The background can be in light or dark mode, depending on your settings. Plus, it’s easy to access the prediction markets by clicking the option on the main menu.

To trade more conveniently, I recommend installing the Robinhood app. It has a more minimalist design that lets you focus on just the prediction markets you select. Thanks to the interface, I bought and sold event contracts much faster during my Robinhood app review.

One feature that made things smooth for me was the featured graphs. Robinhood plots the market activity as contract prices rise and fall, and you can sort it by Live, 1 Day, 1 Week, and Max (all-time). I used the graphs to understand trader sentiments for more informed predictions.

Easily navigate the Robinhood website on desktop

Download the Robinhood mobile app today!

Robinhood deposits and withdrawal methods

On the Robinhood site, you have three main payment methods for deposits: Instant Deposit, debit card funding, and wire transfer. These options use traditional channels, so they’re not exactly fast. In my experience, they can take up to five business days. The silver lining is that there’s no minimum, so you can transfer any amount that suits your budget.

I recommend the Instant Deposit option whenever you want to fund your account. That’s what I used during this Robinhood prediction markets review. While it may take up to five days to complete, a portion of the money will be available for trading instantly.

For payouts, Robinhood supports standard bank transfers (ACH) and instant withdrawals to a debit card or bank account. The processing time differs per payment method and depending on your bank. However, expect the funds to arrive within five days.

My best Robinhood withdrawal method is ACH transfers because it has a more flexible limit of $50,000 or above. With instant withdrawal to debit card or bank account, the limit is $1 to $150 per transaction.

Fees and spreads

I can confirm that Robinhood doesn’t have deposit fees. However, your selected payment method might charge you, especially with debit card funding. When withdrawing from Robinhood, you may pay a 1.75% processing fee using the instant payout option. Meanwhile, there are no fees with ACH transfers.

Besides the fees, Robinhood event contracts have a $0.01 commission when buying and selling. I find the amount quite minimal, and it won’t cut into your trading funds. Let’s say you intend to purchase or sell off 500 event contracts in one go. The commission will be just $5.

A separate $0.01 exchange fee may apply from Kalshi or ForecastEX, depending on which provides the contracts. If so, it takes the trading cost to $0.02, which is still not a lot.

Robinhood offers 24/7 customer support

As a top-rated prediction market brand, I wasn’t surprised to see that Robinhood has 24/7 customer service. You can reach out to the support agents via live chat on the website or mobile app. There’s also a phone option, but the line is only open from 7 AM to 9 PM ET.

I tested the live chat while making this review and was welcomed by a virtual assistant. The bot was quite helpful in solving regular issues, provided your questions are clear. You can request an actual agent at any time, and one will be available in minutes.

If you join Robinhood, you won’t have to contact customer support to understand how the platform operates. There’s a comprehensive help center that explains everything. It has topics like Getting started, Account and login, Investing, Robinhood Derivatives, Banking, and more.

I checked the Derivatives section since it concerns Robinhood prediction markets. On the page, I saw an extensive guide on event contracts, which is enough to help any new trader learn the ropes.

How to register with Robinhood in the US

So far, I’ve covered all there is to know about Robinhood’s prediction markets. If you wish to begin trading the event contracts, you have to first create an individual investing account. Here’s what to do:

1. Click the links on this page to visit Robinhood and install the app

2. Tap the Sign Up option and complete the registration steps

3. Follow the onscreen prompts to verify your phone number and identity

4. Accept the terms and conditions

5. Submit your registration and wait for confirmation

Robinhood will verify your identity automatically as you submit your registration. If it doesn’t work, the platform will then ask you to submit supporting documents. It took a few days for Robinhood to approve my account opening request after submitting. Look out for the confirmation email from the site to know when you’re good to go.

Applying for a Derivatives account

According to the Robinhood regulations I came across, traders need a Derivatives account to access the prediction markets. Remember that the markets are offered under Robinhood Derivatives, LLC.

Opening my Derivatives account wasn’t a hassle since it’s more like applying. These are the steps to take:

1. Tap the Prediction Markets option on the main menu

2. Select a prediction market from the category list

3. Tap on any featured event contract

4. Follow the onscreen instructions to complete your application, and submit

As with the initial registration process, Robinhood may take a few days to approve your Derivatives account. Once you see a confirmation email from the brand, you can start trading the event contracts.

Robinhood excels as a prediction market site

The verdict from my Robinhood prediction markets review is simple: the site meets expectations. I can even say it surpasses it in several areas, especially with the sports and politics options. If you’re interested in culture and economics, Robinhood still has a decent range of markets to predict.

I appreciate the platform’s ease of use on both web and mobile apps. The 24/7 customer support live chat is handy to help resolve any issue, and there’s even phone support during active business hours.

Robinhood also gets my recommendation in terms of costs. On the site, you pay just a $0.01 commission when buying or selling event contracts. Also, you can avoid fees with specific payment methods when depositing or withdrawing.

Ultimately, Robinhood is a worthwhile prediction market platform for US traders. You can start signing up by clicking the banners on this page.

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