Robinhood and FanDuel Blur the Line Between Sports Betting and Stock Trading

The boundary between sports betting and financial trading is narrowing as platforms like Robinhood and FanDuel move deeper into event contracts, a product that allows users to place binary wagers on outcomes such as the result of a football game or whether gold will close above a set price.

In August, Robinhood announced event contracts tied to college and professional football, followed closely by FanDuel’s plan to offer contracts on assets such as stocks, bitcoin, oil, and gold. These products occupy a regulatory gray zone: overseen by the Commodity Futures Trading Commission (CFTC), yet outside the jurisdiction of state gaming regulators and the Securities and Exchange Commission. This distinction has sparked resistance. The American Gaming Association argues that sports-based contracts are gambling and should be regulated as such, while major sports leagues, including the NBA, warn of integrity risks more difficult to police than those in regulated sports betting.

Robinhood has already taken legal action against regulators in Nevada and New Jersey, claiming their attempts to block event contracts infringe on the CFTC’s exclusive authority. Despite regulatory uncertainty, companies see strong incentives. A Mizuho survey found two-thirds of Robinhood users also engage in mobile sports betting, highlighting a lucrative overlap. Analysts suggest that early movers could capture a significant market advantage by cross-selling financial and betting products.

This is not Robinhood’s first attempt to merge sports with trading. Earlier this year, the firm offered Super Bowl-related contracts, only to be asked by the CFTC to halt the offering a day later. Still, the company maintains its goal is to become a one-stop hub for investing, trading, and prediction markets.

Proponents argue that competition will drive better pricing and tighter spreads as markets expand, but concerns remain about consumer protection and market integrity. As Joel Simkins of XST Capital cautioned, blurring fandom with investing risks misleading users into thinking that betting on a favorite team equates to making sound financial decisions.