Key Moments:
- Robinhood Markets (NASDAQ: HOOD) has introduced prediction markets for NCAA and NFL events during the regular season.
- ARK Invest highlights Robinhood’s federal regulatory advantages, allowing nationwide access to these contracts.
- ARK Investment Management maintains significant holdings in both Robinhood and DraftKings (NASDAQ: DKNG) through its ETFs.
Robinhood Advances Sports Prediction Markets
Robinhood Markets (NASDAQ: HOOD) has recently taken a step further into the sports event contracts space, notifying clients about its new prediction market offerings for both NCAA and NFL games throughout the regular season. This development signals Robinhood’s commitment to expanding beyond traditional brokerage services.
Federal Oversight Provides Competitive Edge
According to ARK Investment Management analyst Nicholas Grous, Robinhood benefits from regulation at the federal level for these new contracts, specifically under the Commodity Futures Trading Commission (CFTC). This allows Robinhood to offer prediction markets to users across all 50 states, unlike conventional sportsbook operators who must adhere to varying state-by-state regulations.
As Grous explains, “Because the Commodity Futures Trading Commission (CFTC) regulates the new contracts, users no longer need to navigate a patchwork of state gambling laws, because Robinhood’s prediction markets function more like tradable financial contracts than sports bets.”
He adds that challenges faced by companies such as DraftKings (NASDAQ: DKNG) stem from “US has created friction for both operators and consumers of legal sports betting.” In contrast, Robinhood and similar firms are able to streamline their services without managing separate state requirements.
Robinhood’s partnership with Kalshi might change the game—literally. We break down what it means for the future of the sports prediction market on "The Brainstorm."https://t.co/s02vTz1Ss0
— ARK Invest (@ARKInvest) August 27, 2025
Structural Differences Between Platforms
While some in the sports betting sector criticize the classification of prediction markets as distinct from sports wagering, ARK’s Grous draws attention to their differing fee structures. Robinhood implements a flat $0.02 charge per contract, with straightforward fees and results determined by actual market probabilities, whereas companies like DraftKings incorporate fees within odds—often creating a “vig” or deliberate margin for the house.
Grous notes, “Robinhood and DraftKings have different economic models. Robinhood charges a flat $0.02 per contract traded, with transparent fees and outcomes based on market probabilities. In contrast, DraftKings and other sportsbooks embed their margins in the odds—a ‘vig’ typically between 4–6%. Because of the embedded fee structure, bettors need to outperform the sportsbooks’ typical 52–55% win rate simply to break even.”
Despite this, some critics argue that the per contract fee mimics the traditional “vig,” suggesting that prediction market operators may be leveraging regulatory loopholes to compete with sportsbooks. In response, the gaming industry is exploring similar event contract offerings. For example, Flutter Entertainment’s (NYSE: FLUT) FanDuel has initiated a partnership with CME Group (NASDAQ: CME) to create event contracts tied to economic and financial market outcomes, leading to questions about when others in the industry, such as DraftKings, may enter this space.
ARK Invest’s Exposure to Robinhood and DraftKings
ARK Investment Management, under CEO Cathie Wood, is among the largest holders of Robinhood shares, holding positions in multiple exchange traded funds, including the flagship ARK Innovation ETF (NYSE: ARKK). Notably, ARK also maintains sizable investments in DraftKings, underscoring its interest in the evolving intersection between financial markets and sports betting platforms.
| Company | Ticker | ETF Exposure |
|---|---|---|
| Robinhood Markets | NASDAQ: HOOD | Three ARK funds among the largest ETF holders |
| DraftKings | NASDAQ: DKNG | Three ARK funds among the twelve largest ETF holders |
- Author
Daniel Williams
