Robinhood limits prediction markets amid insider trading fears
Retail trading platform Robinhood has narrowed the scope of the prediction markets it offers, citing growing fears that event contracts could be exploited for insider trading and the misuse of privileged information.
Speaking to the Financial Times, Jordan Sinclair, President of Robinhood UK, stressed that the company is “very focused on market abuse and insider trading.” He explained that Robinhood deliberately avoids certain prediction markets, arguing that some contracts are unsuitable for its retail customer base.
The platform is only operating in the United States. It deepened its strategy last November 2025 by partnering with Susquehanna International Group. Together, they now run a Commodity Futures Trading Commission (CFTC)-licenced exchange and clearinghouse, strengthening Robinhood’s foothold in regulated derivatives.
CEO Vlad Tenev of Robinhood notes that prediction markets are one of the platform’s fastest-growing business lines. Last January 2026, the joint venture between Robinhood and MIAdx was finalised. The acquisition secured the infrastructure to list and clear event contracts under federal oversight.
But analysts remain cautious. In late 2025, several media outlets reported on insider trading among Robinhood executives, thus raising concerns about regulatory headwinds and the uncertain profitability of event contracts.
Insider trading risks
One of the most controversial products linked to prediction markets is the “mention markets.” It allows bets on whether specific words or phrases will appear in speeches or similar events. Robinhood has excluded these contracts, citing the high risk of insider advantage.
Additionally, the platform steers clear of markets connected to company performance announcements, where insider information could easily skew outcomes. Sinclair emphasised that Robinhood is selective and differentiates itself from competitors. Instead, it aims to align with regulated venues like Kalshi and ForecastEX while avoiding higher-risk operators like Polymarket.
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Industry scrutiny
Kalshi CEO Tarek Mansour, in an interview with Axios, acknowledged that prediction markets carry risks of fraud and insider trading. He underscored the need for robust compliance frameworks and predicted heightened federal scrutiny to identify and penalise bad actors.
Robinhood itself faces regulatory challenges. In September 2025, the company sued Massachusetts after the state’s Securities Division sought to block its event contract offerings, arguing they were unregistered securities and that Robinhood’s event contracts resemble sports betting or gambling instruments, not federally protected derivatives.
Robinhood refuted these claims that these contracts are federally regulated derivatives under the CFTC’s exclusive jurisdiction, accusing Massachusetts of overreach. The case of Massachusetts illustrates that this tension underscores broader uncertainty about whether prediction markets are financial instruments or gambling products.
Global landscape
Prediction markets remain a contentious issue outside of the United States as well. In many jurisdictions in Europe, they have categorised them as illegal gambling or unlicenced financial instruments.
France, Germany, and the Netherlands have banned major operators like Polymarket. France’s gambling regulator, the Autorité Nationale des Jeux (ANJ), recently warned that prediction market platforms are unauthorised and constitute illegal gambling services.
Some jurisdictions, however, are exploring regulated pathways. Gibraltar became the first European country to licence a prediction market operator under existing betting rules. Meanwhile, in Malta, the country has signalled interest in drafting dedicated statutory guidelines, highlighting transparency, compliance, and user protection.
Additionally, FIFA has partnered with Predictstreet.io as its official prediction market provider for the 2026 World Cup.
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