Robinhood Adds Banking Services Amid Prediction Market Controversy
Robinhood dropped a bombshell at its second annual Gold Keynote, unveiling Robinhood Banking alongside Robinhood Strategies and Robinhood Cortex.
Gold Members Get Perks
The banking arm, set to roll out later this year, promises Gold members checking and savings accounts with a hefty 4% APY, FDIC insurance up to $2.5 million, and swanky perks like on-demand cash delivery and estate planning.
It’s pitched as a game-changer, cracking open private banking for the little guy, not just the ultra-rich. But the timing’s raising eyebrows, as Robinhood’s prediction market push, mirroring sports betting, already has it in hot water with states.
Robinhood Strategies, live now for Gold members and hitting all users this month, offers expert-managed portfolios for a 0.25% fee, capped at $250 yearly for Gold folks.
Robinhood Cortex, an AI tool due later in 2025, will dish out real-time market insights. Banking’s the big swing, though, Gold subscribers get 24/7 support, tax advice, and net worth tracking. “We’re ending exclusivity,” Robinhood’s team said, per the keynote. Yet, pairing this with a prediction platform some call straightforward gambling feels bold, maybe too bold, given recent troubles.
Prediction Markets Stir the Pot
Robinhood’s prediction markets hub, launched March 17 via KalshiEX, lets users bet on events like March Madness and Fed rates. It’s racked up buzz, Kalshi’s $200 million in tournament trades, per industry stats, but also grief.
Ohio and New Jersey ordered Robinhood out by April 14, per OCCC and NJDGE March filings, tagging it unlicensed sports gaming.
Massachusetts subpoenaed Robinhood on March 20, due April 3, probing college sports bets, per Reuters. Critics, like Mass. Secretary Bill Galvin, call it a “gimmick” blurring investing and betting lines.
The combo’s dicey. States see prediction markets as a dodge around regulated gambling, $11 billion in U.S. bets in 2024, per AGA, proves the stakes.
Robinhood’s banking play, leaning on its 23 million users, per 2023 figures, looks confident, almost cocky, while it fights legal battles. Kalshi’s CFTC win in 2024 loosened rules, but states aren’t budging, and Robinhood’s prior Super Bowl flop in February shows the tightrope.
Prediction platforms are flexing: offshore Polymarket’s $2 billion in trades since 2023, per company data, backs that up. Robinhood’s banking pivot, tied to Gold’s $5 monthly fee, could pull in $500 million yearly at 4% APY on idle cash, per analyst math. But mixing it with a betting-esque hub has poeple split. Supporters see innovation; skeptics smell trouble.
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