Let’s take a break – I’d like to think about this incredible sentence, about a asset class that democratizes access to events as they unfold. You see, I thought we all had access to the events of the election because we all exist in reality and can experience them. But apparently, if we can’t bet on an event, it doesn’t happen. This is a fascinating view of metaphysics, and I would love to hear more. No one is betting on my birth, for example, and so there is no asset class tied to my existence. So, am I real?

I’m kidding. Obviously whoever wrote this just isn’t very good with sentences. No, I want to get to the heart of the matter here, which is indicated by the expression “democratizes access”. This phrase sits right next to “financial inclusion” in the lexicon of people trying to take your money. “Democratizing access” is one way to describe “opening up a betting market”, but I don’t think it’s the most accurate!

Here’s what Robinhood will allow users to do starting today. If you think Kamala Harris or Donald Trump will win the presidential election, you can sign up for an “event contract.” You can exchange these contracts for real money; this is a kind of derivative contract. Robinhood’s exciting new investment opportunity comes after the Commodities Future Trading Commission lost case against platform, Kalshiwhich offers contracts for political events. This case is under appeal, but will not be decided until after the current election.

Anyway, the really fun thing about election markets is that they can easily be biased. For example, Polymarket admitted that a single French bettor is responsible for huge bets on Donald Trump’s presidential victory. So while polls show the candidates in a tight race, Polymarket put Trump’s chances of victory at 62%. Are betting markets accurate? Well no, not always.

But let’s be real about Robinhood for a minute. “Robinhood is the brokerage firm for the fun game of meme stocks and meme cryptocurrencies,” Bloomberg» noted Matt Levine in 2021. A quick look at Robinhood’s most recent quarterly earnings reports shows that much of its revenue growth is attributable to cryptocurrency trading.

I’m old enough to remember a time when Robinhood CEO Vlad Tenev deadpanned that Robinhood was just a good way to introduce people to the financial markets, as if eTrade ( and before that, investment clubs) did not already exist. . This was an obvious lie when looking at the revenue model: Robinhood makes money every time a user trades, and the more frequently A user professionsthe more likely it is they will lose money.

I don’t think anyone imagines an investor accumulating long-term wealth by betting on the presidential election. It’s definitely not the kind of thing that goes into a conservative retirement account. I think, however, that this is just the beginning of the contracts you’ll be able to play with Robinhood, and these could prove even more effective at generating income than crypto.