Robinhood Eyeing Europe with Prediction Market Expansion

Robinhood’s desire to expand into Europe with its prediction markets is a movement that could bring on a surge of changes in sports betting across the continent. The electronic trading platform, which facilitates trades of stocks, cryptocurrencies, futures contracts and wealth management, has already found a massive user base in the US. And now, the next frontier awaits: Europe.

Formal talks have already started with the UK and Europe regarding how to bring the event contracts abroad, and it comes during Robinhood’s broader European rollout. Since July, Robinhood has offered tokenised US stocks across the EU and EEA, with new crypto offerings and products to place its foot in the EU/EEA markets firmly.

Bringing Prediction Markets to Europe

If passing the CFTC and federal legislation seemed tough, Europe is going to be a much more difficult ground to break for Robinhood. At the end of September, Robinhood CEO Vlad Tenev announced that the Robinhood Prediction markets crossed 4 billion traded contracts – with 2 billion of those coming in Q3 alone. The Prediction Hub, as you would find it on Robinhood, has event contracts that are supplied by Kalshi – with whom Robinhood has been in a partnership since March. It is a win win for both companies, as Robinhood has a large user base, while Kalshi has built its name as one of America’s finest prediction markets.

The record breaking rush is just the start of the prediction market frenzy in the US, which took off with the momentous wave of NFL betting when the regular season started. Kalshi rolled out a wide range of NFL event contracts and NCAAF betting style products. These include multi event contracts with 2 or more event requirements. In sports betting terms, these are your parlays.

Hype Around Prediction Markets in the US

The hype now around these prediction markets as an alternative to sports betting is growing exponentially, beating the record numbers prediction markets recorded during the US elections. Big players such as FanDuel and Underdog have also stated their interest in launching prediction markets of their own. And the CFTC, which regulates financial derivatives (that event contracts and prediction markets are classified under), has given the go ahead for many new products to hit the shelves. It even greenlighted the return of Polymarket, a powerhouse among crypto first prediction market platforms.

Europe, which is a country that has a taste for sports betting and the intrigue to explore alternative betting platforms, is a natural extension for the likes of Robinhood.

Legal Challenges Robinhood Faces in Europe

Within the US framework, event contracts are considered futures and regulated by the CFTC. In Europe, the gambling laws are fragmented and vary from country to country, making it difficult for Robinhood to simply extend its services across the continent. In some jurisdictions, the prediction markets fall into the same legal bracket as financial derivatives. This would require a full financial market licence. In others, they are classed as gambling products, for which the relevant gambling licenses must be obtained and player protection standards must be met.

Given the complexity, it is easy to imagine that Robinhood will need different licensing strategies in each country. This, in turn, slows down the expansion and will also raise the compliance costs for Robinhood to run such a product. For example, the UK Gambling Commission considers the event contracts gambling products when they are related to outcomes like politics or non-financial real world events.

France has expressed a legal ambiguity regarding Polymarket, with some products leaning towards gambling products and others more in line with financial derivatives. The federal gambling regulator in Germany considers non-sports event contracts illegal. Only sports events with verifiable results are permitted, and non-sports related products are not licensed.

Robinhood’s Foothold in Europe

Robinhood is familiar with the European market, and in July, it established its first European hub in Lithuania. It obtained a Category A financial brokerage license and a crypto asset services provider license. This effectively gave Robinhood access to Europe, under the unifying MiCA (Markets in Crypto Assets) regulation. Prior to that, in 2024 Robinhood successfully entered the UK market, though only with a limited offering of services.

The company launched over 200 US stocks and ETFs for residents in all 31 EU/EEA countries, with no commission trading (although there are currency conversion fees). It essentially gave Europeans access to the US equities without the need to own a US brokerage account. This preliminary step is crucial to building trust, testing the waters, and for Robinhood to get up to standards with European AML and KYC policies. Moving to event contracts will not be an easy or quick feat by any measure, but Robinhood is a big player with great resources.

Does the EU Already Have  Similar Platforms

Similar yes, but none of the competitors in Europe have exactly what Robinhood offers via Kalshi. The biggest event trading platform in Europe is Polymarket, which is popular for political and geopolitical event contract trading. It is not fully legal in Europe, with regulators in France, Belgium and Poland specifically blocking access to the popular platform. However, in Germany, Polymarket has an active base of users, although with limited product offering.

There are other blockchain based prediction markets, such as Augur or Gnosis, but these are much smaller operations. The biggest competition for Robinhood is most likely the alternative betting sites such as betting exchanges or brokers. Betfair Exchange has long offered markets on politics, sports and other events, but it is regulated as a gambling product, not financial trading. Platforms like BetFair, Betdaq and Smarkets are not your classic betting sites. They are P2P betting exchanges, in which bettors make wagers against each other instead of against the house.

So there are similar types of products, including decentralized blockchain prediction markets like Polymarket or Augur; and P2P betting exchanges such as BetFair or Smarkets. But if Kalshi were to enter the space through Robinhood, it would really stand in a class of its own. And it would be the only such product in Europe.

The Road Ahead For Robinhood

What comes next for the US financial trading company really depends on what they want to offer, how they can obtain the permissions, and whether or not it is feasible.

A) Get Licensed Throughout Europe

Building out a full regulated financial exchange and gaining the necessary gambling licenses where appropriate would be the ideal course of action, if Robinhood wants to distribute its sports betting products. This would take the most time, and it would cost the most, which may affect the offering itself. Robinhood may be forced to hike the conversion fees or even integrate some kind of commission model to pay the high European gambling taxes.

B) White Label Through Licensed Operators

Another option is to partner with local gambling operators, and serve these event contracts within existing gambling frameworks. It is not a bad deal for Robinhood, as a sports betting partner could effectively white label their products. Robinhood may even decide to partner with multiple regional platforms, to gain access to different jurisdictions via different operators.

C) Create a Hybrid Model with Limited Offering

Should they want to retain full control of their product without partnering, but also forego the lengthy gambling license application procedure, Robinhood can make a compromise. It can create a hybrid product that satisfies the financial and consumer protection standards, while offering limited, yet permissible, sports products. With this option, they are effectively creating a formula that works across the entire region, satisfying all the jurisdictions. But it may come at the expense of various products.

Massive Untapped EU Market

Whatever option they pursue, there will be tradeoffs and necessary paperwork to be approved. So for players, it could be some time before Robinhood’s event contracts come to Europe. And should they find a way, it may not be as comprehensive as the US products at first. But anything can happen.

Being such an influential and powerful company, we expect this interest to amount to something momentous, and for Europe, the betting craze that is taking America right now may be just around the corner.