Let’s pause – I want to reflect on this incredible statement about something. asset class that democratizes access to events as they unfold. Look, I thought we all had access to election events because we all exist in reality and can learn about these things. But it turns out that if we can’t gamble on an event, it doesn’t happen. This is a fascinating vision of metaphysics and I would like to hear more about it. For example, no one is betting on my birth and therefore there is no asset class related to my existence. So am I real?

I am joking. Frankly, whoever wrote this isn’t very good with sentences. No, here I want to get to the heart of the issue that the phrase “democratizes access” points to. This phrase appears right next to “financial inclusion” in the lexicon of those trying to take your money. “Democratizes access” is one way to describe “opening up the betting market”, but I don’t think it is the most accurate way!

Here’s what Robinhood will let users do starting today: You can buy an “event contract” if you believe Kamala Harris or Donald Trump will win the presidential election. You can trade these contracts for real money; These are a type of derivative contract. Robinhood’s exciting new investment opportunity, Commodity Futures Trading Commission lost its case against platform Kalshioffering political activity contracts. This case is being appealed but will not be decided until after the current election.

Anyway, the really fun thing about choice markets is that they can get skewed easily. Polymarket, for example, admitted that a single French bookmaker was responsible for huge bets that Donald Trump would win the presidential race. While polls show that the candidates are in a close race, Polymarket put Trump’s probability of winning at 62 percent. Are betting markets accurate? No, not always.

But let’s be realistic about Robinhood for a minute. “Robinhood is the brokerage for fun gambling on meme stocks and meme cryptocurrencies” Bloomberg‘s Matt Levine noted: A quick look at Robinhood’s latest quarterly earnings reports shows that much of the revenue growth can be attributed to crypto trading.

I’m old enough to remember a time when Robinhood CEO Vlad Tenev was going around insisting that Robinhood was a good way to introduce people to the financial markets, as if eTrade (and investing clubs before it) didn’t already exist. . This was a blatant lie when you look at the revenue model; Robinhood earns money every time the user makes a transaction and more often A. user actionsmore likely they will lose money.

I don’t think anyone imagined that an investor would achieve long-term wealth by gambling on the presidential election. Definitely not the kind of thing that would go into a prudent retirement account. But I think this is just the beginning of the contracts you can gamble with Robinhood, and they may be more effective at generating income than crypto.