Robinhood restricts prediction markets amid insider trading worries

Retail trading platform Robinhood has restricted the range of prediction markets it offers, amid growing apprehension about the potential misuse of event contracts for insider trading and privileged information. 

Jordan Sinclair, president of Robinhood UK, told the Financial Times on Sunday, that the company was “very focused on market abuse and insider trading”.

Sinclair said Robinhood intentionally does not provide access to all types of prediction markets or event contracts.

“There are some we’ve chosen that aren’t right for our customers and that is, I think, the way you can kind of navigate that world,” he added.

Robinhood prediction markets are currently only available in the US.

Industry-wide regulatory tensions

The decision echoes broader market concerns around insider trading. Prediction markets, which enable users to trade contract on the outcomes of future events, have been gaining traction among retail investors. However, operators have faced scrutiny for potentially enabling trades based on non-public or clandestine data.

Among the more contentious offerings are “mention markets,” where bets focus on whether specific words or phrases will appear during public speeches, earnings calls, or similar events. Robinhood has explicitly excluded these contracts due to the high risk of insider advantage. 

Sinclair pointed out that the platform had adopted a more selective approach compared to some competitors, by favouring regulated venues such as Kalshi and ForecastEx, while avoiding higher-risk providers like Polymarket.

Kalshi CEO Tarek Mansour acknowledged the risks surrounding prediction markets in an interview with Axios last week. He stated: “prediction markets are likely to attract fraud and insider trading.” 

Mansour emphasised the importance of robust compliance frameworks. He anticipated intensified federal scrutiny to identify and penalise bad actors in the industry.

Robinhood’s position also reflects its ongoing legal dispute with regulators in Massachusetts. The company filed a lawsuit against the state in September 2025 after the Massachusetts Securities Division moved to block its offering of event-based contracts, arguing they constituted unregistered securities being marketed to retail investors. 

Robinhood, however, contends that the contracts in question are federally regulated derivatives listed through designated exchanges. They therefore fall under the exclusive jurisdiction of the Commodity Futures Trading Commission (CFTC). 

The company argued that Massachusetts was overstepping its authority by attempting to apply state-level securities laws to products already governed at the federal level. 

Prediction markets meet Europe

While the US is grappling with how to regulate prediction markets, Europe has largely taken a more restrictive stance. In many jurisdictions, such platforms are treated either as illegal gambling or as unlicensed financial instruments. 

This has led countries including France, Germany and the Netherlands to block access to major operators like Polymarket. 

France’s gambling regulator, the Autorité Nationale des Jeux (ANJ), issued a warning earlier this year that prediction market platforms “were not authorised in France and are considered illegal gambling services”.

It added that these sites displayed “addictive characteristics like those found in online gambling – but amplified by the absence of the protective mechanisms that exist in the legal gambling market”.

Despite this generally prohibitive approach, some European jurisdictions are beginning to explore regulated pathways. Gibraltar recently became the first in Europe to license a prediction markets operator. This signalled potential openness to the sector under existing betting frameworks. The Predictstreet.io website claims to be the official prediction market partner of the upcoming Fifa World Cup 2026.

Meanwhile, Malta has also indicated it is “actively exploring” a dedicated statutory framework to govern prediction markets. They emphasised on transparency, compliance, and user protection as the market evolves. 

“We recognised early on that users need to feel safe if this industry was going to grow, which means it needed to uphold the highest standards of transparency and compliance”, said Malta’s Economy Minister Silvio Schembri at the end of March.

Kathryn Evans

Kathryn covers bitesize breaking news with a primary focus on EMEA and US legislation. A proud North Walian, fluent Welsh speaker and lifelong Wrexham FC fan – long before Hollywood came calling.