Robinhood will start offering customizable sports parlays early next year as it looks to fend off competition from other financial technology companies that have embraced betting.
It will broker these multi-event bets—which it refers to as “combos”—using the Request for Quote (RFQ) system on Kalshi’s exchange, said Adam Hickerson, Robinhood’s senior director of futures and prediction markets, in an interview.
Robinhood is racing to introduce custom parlays before the NFL playoffs, which begin Jan. 10. Until then, Hickerson said, the company will offer pre-built parlays.
Kalshi pioneered RFQs as a way for people to craft custom parlays within the prediction market framework—something exchanges had previously failed to accomplish as they looked to replicate one of the most popular products at traditional sportsbooks. Bettors are drawn to custom parlays because they allow for personalization and dangle the prospect of turning small stakes into a large gain.
With RFQs, in-app retail bettors signal the multi-leg wagers they want to place, and market makers in a back-end exchange interface offer odds for the requested bet. Offers typically arrive instantaneously. While this accomplishes the goal of giving bettors a desirable user experience, the barriers to entry to become an oddsmaker seem to contradict an insistence that prediction markets are open, peer-to-peer and not gambling.
The Commodity Futures Trading Commission (CFTC), which oversees most U.S. betting exchanges, has not commented on the novel use of RFQs.
Robinhood hopes the high engagement level for parlays seen at traditional sportsbooks—they represent more than half of operator gross revenue—carries over to its exchange format. And over time, Robinhood plans to expand combo bets beyond sports.
“The plan is to also allow customers to combine different outcomes between economics or culture or sports or weather, whatever it may be,” Hickerson said.
Just like at sportsbooks, prediction market parlays are an overwhelmingly losing proposition for retail bettors. They are, however, potentially lucrative for professional market makers working with exchanges because they face less price competition than they do with single-event bets.
Robinhood has a suite of products that extends far beyond prediction markets, giving it a userbase of tens of millions to whom it can offer sports wagers. Robinhood also lets people invest in stocks and cryptocurrency. The company has a market cap of more than $100 billion, exceeding the valuations of betting-only companies DraftKings, FanDuel, Kalshi and Polymarket combined.
Most of Robinhood’s all-in-one financial app competitors who are involved in prediction markets, including Webull and Crypto.com, do not yet have custom parlays in their apps.
Some financial institutions, such as Schwab, have criticized places like Robinhood that place prediction markets alongside investment vehicles, arguing it is dangerous and potentially addictive for consumers. Robinhood has responded by claiming it is just following what users ask for.
Robinhood says prediction markets are the fastest growing product in its history. Robinhood’s enthusiasm toward betting led it to strike an agreement for its own exchange, LedgerX, in a deal expected to close next year.
Right now, while working as a broker for third-party exchanges such as Kalshi, Robinhood can only offer bets already listed elsewhere. By acquiring LedgerX, CEO Vlad Tenev’s company will gain control of the bet ideation process. It’s unclear how much its transition from broker to exchange operator will affect Kalshi; Robinhood currently accounts for more than half of Kalshi’s betting volume, according to Bloomberg Intelligence.
“We haven’t really been able to integrate or even get our feet wet [with the new exchange] because we’re in that period where we have to wait till everything closes,” Hickerson said. “But one of the things I will say, is that what is most beneficial with having our own exchange is the ability to innovate.”
On Tuesday, Robinhood also announced the implementation of NFL player prop bets, effective immediately.