Robinhood Markets (NASDAQ: HOOD) is moving deeper into the sports event contracts space, announcing plans to offer NCAA and NFL prediction markets throughout the regular season.
The move has caught the attention of the sports betting industry, as it underscores Robinhood’s regulatory edge. Unlike DraftKings (NASDAQ: DKNG) and other operators that must navigate state-by-state gambling laws, Robinhood’s contracts fall under the Commodity Futures Trading Commission (CFTC). That federal oversight allows the brokerage to offer prediction markets nationwide, sidestepping the fragmented compliance landscape sportsbooks face.
“Robinhood’s prediction markets operate like tradable financial contracts rather than traditional sports bets,” said ARK Investment Management analyst Nicholas Grous. “That structure eliminates the patchwork of state regulations, reducing friction for both operators and users.”
Economic Models: Flat Fees vs. the ‘Vig’
Another key distinction lies in pricing. Robinhood charges a flat $0.02 per event contract traded, with transparent outcomes tied to market probabilities. Sportsbooks, by contrast, embed profit margins in their odds.
For example, a -110 wager requires bettors to risk $110 to win $100, with the $10 difference serving as the “vig.” That fee structure means bettors must win at least 52–55% of their wagers just to break even.
“Robinhood and DraftKings operate on fundamentally different economics,” Grous explained. “Robinhood’s model is straightforward, while sportsbooks rely on embedded margins.”
Critics, however, argue that Robinhood’s contract fee resembles the vig in another form, and accuse prediction markets of exploiting regulatory loopholes to compete with sportsbooks.
Industry Pushback and Competitive Moves
Sports betting giants aren’t ignoring the trend. Flutter Entertainment’s (NYSE: FLUT) FanDuel recently partnered with CME Group (NASDAQ: CME) to launch event contracts tied to financial markets, raising speculation about when DraftKings might enter the space.
ARK’s Dual Investments: Robinhood and DraftKings
ARK Investment Management, led by Cathie Wood, has significant stakes in both Robinhood and DraftKings. Several ARK ETFs rank among the top institutional holders of Robinhood shares, while others are major investors in DraftKings.
That dual positioning suggests ARK sees opportunities in both models — the federally regulated, market-based contracts offered by Robinhood and the traditional sportsbook approach led by DraftKings.
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