Robinhood Markets is examining a possible expansion of its prediction markets product outside the United States. The brokerage has opened discussions with regulators in the UK and Europe to tap rising demand for event-based trading, Bloomberg reported.

The company has reportedly been speaking with the UK’s Financial Conduct Authority (FCA) about how prediction markets could be structured locally. In the US, such contracts are treated as futures products and fall under the oversight of the Commodity Futures Trading Commission. In other jurisdictions, regulators often classify them as gambling.

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Rising Demand

Robinhood reported that global interest in prediction markets is growing, particularly in the UK and Europe. The firm entered both markets in late 2023 with its equities and cryptocurrency platform.

Since adding prediction markets earlier this year, Robinhood has brokered more than four billion event contracts, according to Chief Executive Officer Vlad Tenev. Tenev shared the milestone in a post on X this week. Shares of Robinhood rose more than 12% after the announcement and traded up about 3% to $140 on Tuesday.

Robinhood partners with Kalshi and ForecastEx to provide prediction markets in the US. Both platforms are regulated by the CFTC. Expansion abroad would require adapting to local oversight rules. The firm also screens which markets to list. Mackenzie noted Robinhood avoids contracts linked to controversial events.

Competitive Landscape

Prediction markets surged in popularity during the 2024 US presidential election, when platforms like Kalshi and Polymarket saw billions of dollars in trades. The sector has since expanded into sports, economics, and asset price volatility.

Related: Robinhood's Prediction Markets Cross 4 Billion Contracts All-Time, CEO Says

Competition is increasing. Polymarket has acquired an exchange to serve US customers. FanDuel and Underdog have also entered the space through partnerships. CME Group said in August it would consider sports-related prediction markets if its partner FanDuel offered them.

Robinhood’s push overseas may help it gain share as the US market becomes more crowded. The final hurdle will depend on how regulators abroad classify prediction markets.

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Source: Finance Magnates