It’s been a busy news week for legislation around the US iGaming industry, with Mississippi lawmakers turning on sweepstakes operators. Now the spotlight turns to event contracts, Robinhood and the CFTC.
That’s because, a day after launch, Robinhood has paused its event contract product designed to offer traders the chance to speculate on the outcome of this year’s Super Bowl LIX.
US Contract Trading Platforms – Kalshi
Robinhood had partnered with Kalshi, the market leader in the fast-growing event contract and prediction betting space. However, in response to a request from the US Commodity Futures Trading Commission, that offering has now been put on hold.
Event contracts are seeing a resurgence in popularity in the US thanks to Kalshi. While this type of product does share similarities with standard betting, it’s structured in a different way. Instead of putting money down on odds or a win/loss scenario, traders can buy or sell contracts based on the likelihood of an outcome. The contracts change in price as they are bought and sold, and traders can earn a profit – or make a loss – similarly to trading real stocks.
How Contract Trading Works
Traditionally, event contracts have been used to hedge against the outcomes of financial market events, and Kalshi has been approved by the CFTC to offer such contracts. Despite this approval, the CFTC has recently raised questions regarding the legality of Kalshi’s Super Bowl product under derivatives laws. Kalshi is working with the CFTC to address these concerns as its product offering expands.
Last year, both Robinhood and Kalshi offered their own event contracts on the outcome of the 2024 presidential election. But with only the latter having received prior approval, a partnership would have been a safer bet for Robinhood than continuing to go it alone.
Unfortunately for them, the CFTC intervened on this latest collab, and the rollback was announced in a blog post where Robinhood wrote:
“While we continue to work with the CFTC to understand their concerns, we are suspending the rollout of the Pro Football Championship market. We have rolled this product out to roughly 1% of our customers, and for those who already placed trades, we plan on providing the option to close their positions or take them to resolution.”
Super Bowl LIX Event Contracts at Kalshi
Kalshi is still offering event contracts on this years Super Bowl via its own platform, alongside contracts on which songs Kendrick Lamar will perform at half-time, and whether it will snow in New York City this month. This publicity will have only helped build awareness for the young brand, which has already facilitated over $3 million in trades on the result of the Super Bowl game.
