Robinhood Eyes Sports Event Contracts Over Traditional Betting Entry
Robinhood Markets should prioritize event contracts over traditional sports betting offerings when entering the sports wagering market, according to research from Eilers & Krejcik Gaming (EKG).
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The recommendation comes as new entrants struggle to compete with established players like DraftKings and FanDuel. For context, ESPN Bet, despite its strong brand recognition, only captured 1.5% of US sports betting gross gaming revenue (GGR) by November's end.
Event contracts, which are regulated as derivatives by the CFTC, offer several advantages for Robinhood:
- Broader geographic reach without state-by-state restrictions
- Alignment with existing trading infrastructure
- Familiarity among Robinhood's 24.2 million funded clients
- Successful track record with election-related event contracts
Robinhood CEO Vlad Tenev recently expressed interest in sports betting during the company's investor day, though specific plans weren't disclosed. The company's previous success with election-based event contracts, limited to margin-approved clients with Level 2 or 3 options trading privileges, suggests a potential blueprint for sports market entry.
EKG suggests that season win totals and player props could serve as logical starting points, as they align with CFTC requirements for genuine economic hedging utility and price discovery utility.
This approach gains additional credibility as other financial platforms enter the space. Crypto.com recently launched sports event contracts for the Super Bowl, becoming the first platform to accept cryptocurrency for sports derivatives trading, though winnings are paid in dollars.