Entering the market

Prediction platforms like PredictIt and Polymarket have exploded in popularity recently, especially ahead of next week’s US presidential election. Stock trading platform Robinhood is now jumping on the hype, releasing contracts for Donald Trump and Kamala Harris on Monday.

processed on January 8 when Congress officially certifies the new president

People can buy a “Yes” or “No” contract for either candidate at a price that reflects the current market belief of who will win the election. Robinhood doesn’t allow users to have “Yes” contracts for both candidates. Payouts, capped at $5,000, will only be processed on January 8 when Congress officially certifies the new president.

Growing popularity

While the Commodity Futures Trading Commission tried shutting down election outcome markets, prediction platform Kalshi legally challenged this stance and won an important ruling earlier in October that allowed operators to offering these products.

Talking about the launch of the new contracts, Robinhood said it unlocks “a new asset class that democratizes access to events as they unfold.” Presidential-focused products are the only contracts available for now. Robinhood users need both US citizenship and a derivatives account to trade political contracts.

Big swings

People should be careful about relying on prediction markets to judge if Trump or Harris will come out on top in the vote on Tuesday.

Despite public polling remaining close, Donald Trump had a 19.4% lead on Polymarket recently after a whale from France placed a $26m bet on the 78-year-old to win, causing a major shift in the market. This person reportedly made further wagers to bring their total stake to $45m.