Robinhood

For helping Sherwood Forest help itself

- AINSLEY HARRIS

AS CANVASSERS BLANKETED SWING STATES AND presidential candidates Donald Trump and Kamala Harris sat for podcasts, the software engineers at trading platform Robinhood were racing to the finish line too. Their goal: to launch a new product that would allow users to bet on the election. Interest in prediction markets, which let people take a position on the outcome of specific events, had been skyrocketing. Thanks to a favorable court ruling affirming election event contracts as a form of futures trading, Robinhood cofounder and CEO Vlad Tenev saw an opportunity to capture those bets without aggravating regulators. But he had to move fast.

Tenev—the millennial face of Robinhood’s maturing brand, complete with irony-laden mustache—is bullish on allowing users to trade what are known as event contracts. “[Event contracts] serve a dual purpose,” he says. “For an active trader, they’re an innovative new asset.” Plus, he adds, “they can consolidate market viewpoints.” In other words, they offer insight into how traders view current events.

As part of Robinhood’s strategic focus on active or day traders, who form the backbone of its user base, the Menlo Park, California–based company had already built the necessary infrastructure to support traditional futures trading. Using that same foundation, Robinhood sent its engineers into an all-out, two-week-long sprint to get a presidential election market up and running by October 28.

Tenev’s gamble paid off. Robinhood saw half a billion contracts traded between the market’s unveiling and November 5, yielding the company $0.01 per trade, or roughly $5 million. The fledgling market was also directionally correct, predicting a Trump victory before many election officials reported their vote counts. Establishment political analysts were wary, even derisive, of prediction markets leading up to the election. But compared to Iowa pollsters, Robinhood’s merry band of traders looked like political clairvoyants.