Robinhood has recently launched a prediction markets hub in partnership with Kalshi, a regulated exchange under the Commodity Futures Trading Commission (CFTC). This new feature allows Robinhood users to trade contracts based on the outcomes of various real-world events, such as sports, politics, and economic indicators. The hub debuted with offerings like contracts on the Federal Reserve’s target interest rate for May and the men’s and women’s NCAA basketball tournaments, aligning with the timing of March Madness.
This move expands Robinhood’s offerings beyond traditional stocks and crypto, tapping into the growing popularity of prediction markets in the U.S. The collaboration with Kalshi, which won a legal battle in 2024 to offer election-related contracts, ensures regulatory compliance while bringing event-driven trading to Robinhood’s roughly 25 million users. Kalshi’s legal battle centers on its fight with the U.S. Commodity Futures Trading Commission (CFTC) over the right to offer event contracts tied to political outcomes, specifically congressional control contracts that let users bet on which party will control the U.S. House or Senate after an election.
In June 2023, Kalshi, a New York-based prediction market registered as a designated contract market (DCM) under the CFTC, sought approval to list these contracts. The CFTC rejected them in September 2023, arguing that they constituted “gaming” or gambling—activities it believed were unlawful under the Commodity Exchange Act (CEA) and against the public interest. The agency worried that such contracts could undermine election integrity, incentivize manipulation, or blur the line between financial markets and betting.
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Kalshi fired back, suing the CFTC in November 2023 in the U.S. District Court for the District of Columbia. It claimed the CFTC overstepped its authority, calling the decision “arbitrary, capricious, and contrary to law” under the Administrative Procedure Act. Kalshi argued that its contracts weren’t gambling but financial instruments tied to economically significant events—elections—that people could use to hedge risks or gain insight into future outcomes. They pointed to examples like businesses hedging against policy shifts or researchers using market data to forecast trends more accurately than polls.
On September 12, 2024, District Court Judge Jia Cobb ruled in Kalshi’s favor, granting summary judgment and vacating the CFTC’s ban. Cobb found that the CFTC misinterpreted “gaming” in the CEA, noting that elections aren’t games or illegal activities but civic processes with major economic impacts. She rejected the CFTC’s public interest concerns as speculative, saying the agency failed to prove concrete harm. The CFTC didn’t back down, appealing to the D.C. Circuit Court of Appeals and seeking an emergency stay to block Kalshi from offering the contracts during the appeal. Initially, the appeals court issued a temporary administrative stay, but on October 2, 2024, it denied the CFTC’s request for a longer stay.
Judge Patricia Millett wrote that the CFTC hadn’t shown it, or the public would suffer “irreparable injury” without the stay, though she called the underlying merits “close and difficult.” This greenlit Kalshi to launch its election contracts ahead of the 2024 U.S. presidential election, and it quickly did so, listing contracts on everything from congressional control to presidential outcomes. The CFTC’s appeal is still pending as of early 2025, with oral arguments heard by the D.C. Circuit on January 17, 2025. Meanwhile, Kalshi has expanded its offerings, and by late 2024, it reportedly saw over $1 billion in election-related trades.
The CFTC continues to argue that these contracts threaten election integrity, while Kalshi counters that they’ve proven valuable—offering clearer signals than polls during the 2024 race, with no evidence of manipulation. This battle’s outcome could reshape prediction markets. A win for Kalshi might open the floodgates for other platforms to offer similar contracts, challenging the CFTC’s regulatory scope. A CFTC victory could tighten restrictions, pushing such markets offshore to unregulated spaces like Polymarket. Beyond federal rules, state regulators could still ban these contracts locally, adding another layer of complexity. For now, Kalshi’s operating, but the fight’s far from over.