Robinhood CEO Vlad Tenev said that the brokerage firm is considering expanding into the sports betting market. “We’re keenly looking into that space. Nothing to announce just yet, but it’s so important to our customers and in culture that we’re excited about it,” Tenev said at Robinhood’s inaugural investor day event on Wednesday.
Tenev indicated that a move into sports could take the form of event contracts, like the ones the firm launched right before the presidential election. The contracts allow users to trade outcomes with each other, breaking away from the usual sportsbook setup where people bet against the house.
Robinhood was founded in 2013, revolutionizing retail investing with its commission-free trading platform and focus on younger, tech-savvy investors. The company, best known for its role in the 2021 GameStop trading frenzy, has since expanded into cryptocurrencies, cash management, and retirement accounts.
Shares of Penn Entertainment, Flutter, and DraftKings briefly moved lower shortly after Tenev made the comments, but the changes were modest, CNBC reported. Shares of Flutter finished with a loss of 1.6% for the session, while Penn and DraftKings closed up 1.9% and 1.8%, respectively, on the day. Robinhood’s stock rose 3.5% on Wednesday.
However, analysts at JMP Securities expressed skepticism around Robinhood’s potential to establish itself in the sports betting market. They noted that it is “incredibly hard to start from scratch” in the vertical, emphasizing the significant investments in technology, licensing, and infrastructure required to build a competitive product.
Analysts further pointed out that even established operators have struggled to secure meaningful market share in the US, despite spending billions to that end. They suggested Robinhood could achieve greater success by developing a betting exchange, which could help mitigate the “risks associated with traditional sports betting.”
