Robinhood Tightens Its Offerings Over Insider Trading Concerns

Robinhood has started limiting the range of prediction markets available on its platform, citing rising concerns around insider trading and misuse of non-public information.

Speaking to the Financial Times, Jordan Sinclair, President of Robinhood UK, said the company is “very focused on market abuse and insider trading.” He explained that the company deliberately avoids prediction markets with contracts unsuitable for its users. Its offerings are presently confined to the United States.

Strategic expansion through regulated derivatives infrastructure

Robinhood has not slowed its investment in the underlying infrastructure to support event contracts. In November 2025, the company partnered with Susquehanna International Group to operate a Commodity Futures Trading Commission-licensed exchange and clearinghouse. This move strengthened its position within regulated derivatives markets.

The strategy advanced in January 2026, when Robinhood finalised its joint venture with MIAdx. The acquisition provided the infrastructure to list and clear event contracts within a regulatory framework.

Chief executive Vlad Tenev has identified prediction markets as one of the platform’s fastest-growing segments. But reports from analysts in late 2025 alleged insider trading activity among company executives, raising questions about governance and uncertain profitability.

High-risk contract types excluded from the platform

Among the most contentious types of prediction markets are “mention markets,” where participants bet on whether certain words or phrases will appear in speeches or live events. These contracts bear a higher risk of insider advantage, hence Robinhood has excluded them entirely.

The same logic applies to markets on company performance announcements, where insider access can create a structural imbalance between participants.

Sinclair noted that the platform’s approach is intentionally selective. Robinhood is aligning itself with regulated venues such as Kalshi and ForecastEX, while avoiding higher-risk platforms like Polymarket.

Kalshi CEO Tarek Mansour stated in an Axios interview that prediction markets stand at risk of fraud and insider trading. Then, he suggested identifying and penalising bad actors through robust compliance systems and heightened federal scrutiny.

Regulatory pressure builds across the US and international markets

In September 2025, Robinhood filed a lawsuit against Massachusetts after the state’s Securities Division attempted to block its event contract offerings. State regulators argued that the contracts resembled unregistered securities or gambling products. 

Robinhood countered that they fall under federal oversight as derivatives regulated by the Commodity Futures Trading Commission, accusing the state of exceeding its authority.

Concerns around prediction markets are not limited to the United States. Several European jurisdictions have described them as illegal gambling or unlicensed financial instruments. France, Germany and the Netherlands have moved against operators including Polymarket.

France’s regulator, the Autorité Nationale des Jeux, has warned that such platforms operate outside authorised frameworks. At the same time, some regions are exploring regulated pathways. Gibraltar has issued licences under existing betting laws, while Malta has signalled plans to develop tailored regulatory guidelines.

Furthermore, FIFA has signed with Predictstreet.io as  official prediction market provider for the 2026 World Cup.

Insider trading contributes significantly to scepticism around prediction markets. Robinhood is addressing this by reducing the contracts available on its platform. It is commendable that they are leveling the playing field for users.