Barrons: Predictions Markets Will Make the Stock Market Obsolete. Yes or No?

This past weekend, National Football League fans placed more than $200 million worth of NFL trades.  "The lines of investing and gambling are being blurred like never before,” says James Martielli, head of investment product for Vanguard’s Personal Investor business.

On any given Sunday, Americans flock to their couches to watch hours of football on TV. Wall Street trading floors are closed, but the American pastime has become prime time for upstart financial platforms known as prediction markets. This past weekend, National Football League fans placed more than $200 million worth of NFL trades through Kalshi, the leading prediction market in the U.S. The financial contracts, like sports bets, pay out depending on the outcome of each game.

Many of those trades are powered by Robinhood Markets’ popular stock trading platform, meaning that viewers can use their NFL profits to buy shares of Nvidia, Nike, or Netflix —all from one app. 

Robinhood, which was home to the meme-stock revolution, has gradually brought prediction markets onto its platform over the past year and added Kalshi’s NFL contracts for the current season. It sees event contracts, which allow clients to place money on Yes/No predictions about coming events, as a democratizing force in the world of finance.

"Adding pro and college football to our prediction markets hub is a no-brainer for us as we aim to make Robinhood a one-stop shop for all your investing and trading needs,” Robinhood said in a blog post announcing the Kalshi-NFL partnership.

But that one-stop shop is raising uncomfortable questions across the world of wealth management: If the same app allows the same trader to place money on the outcome of sports events and corporate earnings growth, what’s the difference between gambling and investing?

"The lines of investing and gambling are being blurred like never before,” says James Martielli, head of investment product for Vanguard’s Personal Investor business.

And this week, those lines blurred even more, with Robinhood announcing sports trades linked to a series of related events. One possibility: The San Francisco 49ers will win on Sunday, Christian McCaffrey will rush for more than 100 yards, and the total score will be more than 50.

https://www.barrons.com/articles/kalshi-robinhood-polymarket-betting-prediction-markets-2572c3bc