Robinhood has pulled certain market prediction contracts from its platform, citing concerns about market manipulation and insider trading, despite the brokerage predicting the fast-growing product category could generate $300 million in annual revenue.
Important points:
- Robinhood removes ‘Mention Markets’ from its platform due to risks of insider trading and market manipulation
- Suspiciously timed polymarket bets ahead of US attack on Iran and Israeli insider trading charges, sector-wide scrutiny intensifies
- Prediction market trading volume has soared from $1.2 billion in early 2025 to more than $20 billion per month
Robinhood cites market decline due to manipulation risk
Robinhood UK president Jordan Sinclair told the Financial Times on Sunday that the company is “very focused on market abuse and insider trading.” “We don’t necessarily offer every prediction market or every event contract. Some of the contracts we select may not be appropriate for our customers,” he added, but declined to say when the decision was made or whether other contract categories were also restricted.
Excluded markets are a means by which users can bet on whether certain words will appear during events such as corporate earnings releases, political speeches, or other high-profile occasions, such as whether NASA officials will say “president,” “radiation,” or “damage” during the Artemis II post-flight briefing. Although this product is popular in both Karshi and Polymarket, it is particularly vulnerable to abuse by those who know in advance what will be said.
The decision follows a series of incidents that have brought the field of prediction markets to the attention of regulators. In February, some unusually large and well-timed bets appeared on the polymarket ahead of a U.S. military strike against Iran. Israeli authorities later charged the two with using classified defense information to bet on military operations through the platform.
Robinhood entered the prediction market last year through a partnership with Calsi, a CFTC-regulated exchange that controls about 89% of the U.S. prediction market, according to a Bank of America report cited by CoinDesk. The brokerage firm also has small transactions with ForecastEx, but is not affiliated with Polymarket, which allows users to trade via crypto wallets with minimal identity verification requirements.
This selective approach reflects the reputational calculus facing the publicly traded company, which has spent years rebuilding trust after the 2021 GameStop trading restriction controversy. CEO Vlad Tenev said prediction markets are Robinhood’s “fastest growing business to date,” with 12 billion contracts traded by 2025.
Concerns about its integrity come at a time of deep legal uncertainty for the industry after a federal judge on Friday blocked the prediction market operator’s initial criminal arraignment by the state of Arizona, among other legal issues. The ultimate question is whether prediction markets operate under a single federal framework or are divided into jurisdictional models similar to the U.S. sports betting landscape.
In Robinhood’s case, the monthly trading volume across its predictive platform exceeds $20 billion, but the question of what constitutes insider trading in event contracts remains an open question. This means the industry continues to be exposed to the types of incidents that could trigger widespread regulatory crackdowns.
