Robinhood

A familiar name to all the investors and day traders, Robinhood prediction market is also a platform where you can make bets on various events by purchasing contracts. It’s streamlined, works great on mobile devices, and offers plenty of guidance to rookies.

What Is Robinhood?

Robinhood is a well-known investment and trading platform. It was launched in 2013 as a no-fee trading platform, advertised as a tool for “democratising finance” for everyday people. Recently, the platform was expanded to include prediction markets. They’re called event contracts here. 

So, how does Robinhood work? You purchase contracts for YES or NO for a market that interests you. Contracts are priced based on the probability of the outcome. Once the market expires, as in the event resolves, winning contracts pay out $1 per unit while the incorrect ones are valued at $0.

It’s also possible to trade contracts as long as the market is open. Their values may change over time. If you decide to close contracts before the market resolves, your profit or loss will be settled based on the current value of the contract. It’s a very streamlined process, with total transparency.

Is Robinhood Legit and Secure?

Robinhood has been around for a while so, yes, it is a legitimate company and trading platform. The prediction markets side of things is regulated as Robinhood Derivatives by the CFTC. It’s available in all 50 US states.

What many users don’t like, though, is that the app bundles up everything in one place. Your savings, investments, 401k, and prediction markets are all next to each other. Using a single account for all of that isn’t what we’d call the most secure way to store funds and engage with prediction markets.

The platform can also fold under the stress from time to time. Outages aren’t frequent, but they’re very annoying, especially when the markets reach high volatility.

How to Sign Up and Get Started

Here’s how it all works once you hit the Sign Up button:

• Enter your full name and email address, then set your password
• Then, enter your physical address and phone number
• Verify your phone number
• Make a payment to the Robinhood exchange to fund your account and wait for the funds to become available
• Find the market you want to purchase contracts on, then select a contract within that market
• Input the number of contracts you wish to purchase; note the total price and estimated payout, then confirm the trade

Buying contracts is very quick. Let’s take, for example, how contracts for the ICC Men’s T20 World Cup in cricket work.

Once you select this market, you can then choose between various contracts, each representing a participating country in this tournament. India was at $0.43 for YES to win the whole thing (and $0.59 for NO). If we bought ten contracts for YES, it would cost us $4.3 while the payout would be $10, meaning this contract nets us a neat $5.7 profit if India does win the T20.

This is one of the more complex of Robinhood markets. Usually, you’re picking team 1 or team 2, and then buying yes/no contracts for each side. But, as you can see, it’s all pretty straightforward. During our Robinhood review, we didn’t run into any issues with the prediction markets side of things.

Available Markets and Event Types

As previously mentioned, Robinhood works like most modern prediction market platforms. You choose an event, then select whether you want to buy contracts for a Yes or No outcome, and how many of them. The higher the price, the more likely the outcome is expected to happen.

Among Robinhood’s markets, you’ll find bets on award shows like the Oscars, college basketball and March Madness bets, predicting the movement of crypto prices, guessing who will be on the cover of the next NFL game, and plenty more.

The main prediction categories are sports, economy, entertainment, and politics. There are some unusual markets, too, specifically predicting the price of precious metals. Robinhood also frequently features various markets on its main page, in case you’re looking to hop on the popular picks.

Fees and Payouts: What Does It Cost?

For customers who frequently buy and sell contracts, Robinhood trading can become quite an expensive endeavour. The platform charges a flat $0.01 fee on every contract, no matter whether you’ve bought or sold it. 

Additionally, there can be a spread fee in cases when the total for the Yes and No options goes above $1, meaning that Robinhood fees include the amount above that dollar.

The fees do not stop there. When withdrawing money, the platform may charge you an additional 1.75% fee if you’re using the instant payment feature. This fee is a $1 minimum. You’re not charged for just holding onto contracts, luckily.

User Experience: Platform, App, and Interface

Like all segments of the Robinhood app, the prediction markets section is streamlined and very easy to understand. The app is available on all major smartphones and can be downloaded directly from app stores.

It’s pretty fast, too, which is not surprising considering the stripped-down interface. You jump straight into the markets after you’ve set up your Robinhood account, buying and selling contracts with ease.

The app shows lots of useful data that helps with optimising trading strategies. It’s possible to analyse daily, weekly, and live movements of each individual market, as well as the whole group at large, handy when you’re deciding on more complex predictions.

Customer Support

Robinhood offers support via email and live chat, of which the former is a recommended option when you need issues resolved quickly. There’s also a comprehensive Help section that explains in great detail everything about the prediction markets and how Robinhood contracts work.

Deposits, Withdrawals, and Payment Methods

To start using Robinhood's prediction market, you’ll need some funds in your account. You can use either a debit card or bank transfer to top up your account, but do note that bank deposits take up to five business days to process, while card payments are typically processed in half an hour. There’s also an option to set up recurring deposits.

Similarly, you can withdraw your money to either a card or a bank account, although we recommend the latter. The reason is that debit card withdrawals are considered instant payments and incur Robinhood fees. In that case, you’ll lose 1.75% (up to $150) of withdrawn funds.

Final Thoughts: Who Should Use Robinhood?

Robinhood is primarily an investment and savings platform, so people looking for something more than just trading on prediction contracts will find lots to like about it. We also recommend it to anyone who’s tired of complicated and convoluted prediction apps and is looking for something that gets them straight into action.

Do keep in mind, though, that high frequency of trading can take out a chunk of your winnings. The fees on Robinhood prediction markets are inescapable, so it’s good to make a plan of action beforehand and avoid overspending.

Lastly, we can recommend Robinhood to people who are new to prediction markets. With such a well-structured and in-depth help section, you’ll quickly learn all the ins and outs of this type of betting.