Robinhood limits certain prediction market contracts over insider‑trading worries

(AsiaGameHub) –   Amid increasing concerns regarding the potential abuse of event contracts for insider trading and the use of confidential data, retail trading platform Robinhood has limited the scope of the prediction markets it provides.

Speaking to the Financial Times on Sunday, Robinhood UK President Jordan Sinclair stated that the company is “very focused on market abuse and insider trading”.

Sinclair noted that Robinhood deliberately withholds access to certain categories of prediction markets and 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 continued.

Currently, Robinhood’s prediction markets are accessible exclusively in the US.

Regulatory tensions across the industry

This decision reflects wider market anxieties regarding insider trading. Although prediction markets—which allow users to trade on the outcomes of future events—are becoming increasingly popular among retail investors, operators have come under scrutiny for potentially facilitating trades based on non-public or secret information.

Particularly controversial are “mention markets,” where wagers are placed on whether specific words or phrases will be uttered during public speeches, earnings calls, or comparable events. Robinhood has deliberately barred these contracts because of the significant risk of insider advantage.

Sinclair highlighted that the platform has taken a more discerning approach than certain competitors, preferring regulated venues like Kalshi and ForecastEx and steering clear of higher-risk providers such as Polymarket.

In an interview with Axios last week, Kalshi CEO Tarek Mansour admitted to the risks associated with prediction markets. He remarked: “prediction markets are likely to attract fraud and insider trading.”

Mansour stressed the necessity of strong compliance systems. He foresees increased federal scrutiny aimed to identify and punish bad actors within the sector.

Robinhood’s stance also mirrors its continuing legal conflict with regulators in Massachusetts. The company initiated a lawsuit against the state in September 2025 following the Massachusetts Securities Division’s attempt to block its event-based contract offerings, arguing that these were unregistered securities being sold to retail investors.

Robinhood, conversely, maintains that the contracts in question are federally regulated derivatives listed on designated exchanges. As such, they fall under the sole jurisdiction of the Commodity Futures Trading Commission (CFTC).

The firm asserted that Massachusetts was exceeding its authority by seeking to impose state-level securities laws on products already regulated at the federal level.

Prediction markets encounter Europe

As the US struggles with the regulation of prediction markets, Europe has largely adopted a more restrictive position. In many jurisdictions, these platforms are classified either as illegal gambling or as unlicensed financial instruments.

Consequently, nations including France, Germany, and the Netherlands have prohibited access to major operators such as Polymarket.

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

It noted that these sites exhibit “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 largely prohibitive stance, some European jurisdictions are starting to investigate regulated routes. Gibraltar recently became the first European nation to license a prediction markets operator, signalling a potential openness to the sector under current betting frameworks. The Predictstreet.io website asserts it is the official prediction market partner for the upcoming Fifa World Cup 2026.

Simultaneously, Malta has indicated that it is “actively exploring” a specific statutory framework to regulate prediction markets, emphasising transparency, compliance, and user protection as the market develops.

“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”, stated Malta’s Economy Minister Silvio Schembri in late March.