Here’s something that Robinhood didn’t exactly advertise about its event contracts with ForecastEx. They get interest on the cash collateral from these contracts, but they don’t share any of that with the users. For example, other platforms like Kalshi and IBKR do share interest with users (Kalshi gives around 4.05%, and IBKR offers 4.33%).
So if you’re buying election contracts on Robinhood, they’re earning interest on your cash while you’re just waiting for the contract to resolve in January. It’s cool to bet on the election, sure, but it’s not exactly a great deal if you’re tying up your money for months and getting zero interest from it. If you really want to place bets on the election, might be worth checking out other platforms instead.
@Kellan
Wait, what do you mean by ‘cash out?’ Are these contracts actually tradable? Once the election’s done, who would even buy them? Isn’t it just a matter of waiting until January to get your payout if you win?
@Ari
There could be some post-election day trading. Like, if it’s valued at a dollar on Jan 5, maybe someone buys it for $0.99 on Nov 6. Or, if there’s any uncertainty around the results, you might see more movement.
@Zola
Interesting… maybe I’ll try buying one just to see how this works. I thought you were locked in until Jan 8. Even if they are technically tradable, though, I’m guessing there won’t be many buyers.
Imagine if there’s another situation where people won’t accept the election results, and they keep buying the ‘loser’ contract for more than $0. Getting to buy a sure outcome at a discount would be wild.
@Zola
Actually, looking at it now, RH has around 160M open election contracts. That’s about $80M tied up. If they’re earning around 4.5% interest on that for the next two months, it comes out to roughly $600K, maybe a bit more since the contracts don’t resolve until January. It might not be a huge sum, but this is just a beta test. I wouldn’t suggest anyone go beyond a few hundred dollars for these contracts.
@Zola
Maybe, but the fact that RH isn’t disclosing that they’re making money off these funds is questionable. And remember, some people are betting serious amounts, like $30M from that one French guy. Plus, some event contracts are years away from resolving (like economic forecasts for 2026) — while Robinhood doesn’t offer those yet, it probably will in the future.
It’s really about how much money you’re ‘investing’ in this. For the average user, maybe not a big deal. But for RH, this income is definitely significant.
So let’s say you get 100 contracts with a promise of 100% return… how much is it really going to be by inauguration in January? I’ve got a weird feeling about this.
Nico said:
You really shouldn’t bet on binary events anyway.
Why not? There can be good reasons besides gambling. For example, you could hedge against certain outcomes. Say you think one candidate’s policies might hurt your finances—maybe they’d raise taxes or impact the market in a way that could affect your investments. You could hedge by buying a related event contract.
@Frances
If you’re serious about that, provide a deep analysis on how each candidate would impact a portfolio! There are so many unknowns that using an event contract to hedge an election outcome just isn’t reliable. It’s a poor hedge because there’s no return if you’re wrong. At least if you invest in a stock tied to oil, for example, you still own an asset if oil prices don’t move as expected.
