Trading app Robinhood is the latest platform to allow traders to also bet on the election. The move comes after a recent court ruling that legalized election betting in the U.S.
Starting Monday users who apply and meet the criteria can trade a Kamala Harris or Donald Trump event contract.
An events contract is an agreement on the likelihood that an event will have a certain outcome, like a sports game or, in this case, a presidential election.
You put a monetary value on an outcome before it happens, the value of either outcome fluctuates based on the market sentiment and you get money from a contract if it pans out, if it doesn't it's worth zero dollars. It's like investing in the victory of one side or another.
Robinhood believes that this is an opportunity for investors to get more involved in the election, saying in a statement: "We believe event contracts give people a tool to engage in real-time decision-making."
Earlier this month a U.S. Court of Appeals decision paved the way for election betting. It dissolved an order that prevented a startup from taking bets on which political party would end up controlling the House and Senate after the election.
Critics said that decision will create incentives for election interference and could open the door to problems as we get closer to Nov. 5.
One of those critics is Sen. Jeff Merkley, who spoke out against betting on elections in September.
"Do you want to be able to have people bet on the outcome of election and spend vast sums smearing the candidate they want to lose, corrupting the election from the vision of guiding our country forward into a simple gaming exercise about enriching those who can not only just huge bets but can influence the outcome of those bets? Absolutely not, that's why the law was written in this fashion," said Merkley.
However, Wall Street seems to like this idea. Robin Hood's stock rose 3% after the announcement went live.
Robin Hood says it'll roll these contracts out to a limited number of customers — they must be U.S. citizens.
RELATED STORY | Federal court fast-tracks case over betting on the US election
