Robinhood announced on Monday that some users will be able to wager on the outcome of this weekend's Super Bowl clash between the Philadelphia Eagles and Kansas City Chiefs. The new offering, whose current odds give the Chiefs a slight edge to win, represents the popular stock and crypto site's first foray into the world of sports betting. UPDATE: On Tuesday morning, Robinhood announced it was withdrawing the offering following objections by the Commodities an Futures Trading Commission.
While there is no shortage of gambling sites offering bets on the big game, Robinhood is technically offering an "events contract." This is a more dynamic form of speculation because it is not directly informed by odds makers, but by a pool of bettors who are able to buy and sell the contracts on a real-time basis.
In a hypothetical example, the current price for a "Kansas City will win" contract is 54 cents (meaning the buyer would make 46 cents if the Chiefs prevail) but the value of that would likely drop significantly if the team's star quarterback is hurt before the game. In this scenario, the buyer could either sell the contract at a loss or else hold on to it in hopes of an upset and a bigger profit if the team wins.
"Event contracts for the Pro Football Championship leverage the power and rigor of financial market structure to facilitate greater liquidity, transparency, and price discovery," said Robinhood in a statement announcing the news.
This is the second time Robinhood has offered an events contract. Its first offering let customers bet on the outcome of last year's Presidential election, and saw over 100 million contracts change hands.
In a new development, Robinhood is partnering with Kalshi, a startup dedicated to so-called prediction markets, which let users wager on a wide variety of real-world events such as the outcome of conflicts in the Middle East or the timing of a future Taylor Swift release.
For practical purposes, Robinhood will rely on Kalshi's exchange to fill the Super Bowl wagers, but the tie-up also has strategic implications. Currently, two well-funded and high profile startups—Kalshi and Polymarket—are competing to win the emerging prediction markets business. Robinhood's decision to partner with Kalshi, rather than compete with it as it did in the case of the Presidential election, could signal a longer term alliance or future acquisition.
"Working with Kalshi was the best way for us to offer the Pro Football Championship contract in time for the game on Feb. 9," said a Robinhood spokesperson in response to an inquiry about why it partnered with the startup.
Only a select number of Robinhood users can buy Super Bowl wagers. According to the company, eligibility is "based on the specific account investor profile that a user completes. It takes into account a number of things like investing experience, financial situation, and risk tolerance. "
Any current or former player, coach or staff of a professional sports team are ineligible to participate.
This story was updated to reflect information later provided by the company about who is eligible to place wagers.
