How Do Robinhood Predictions Work?
To understand the Robinhood fees, we first need to look at how this site and its prediction markets work. Robinhood is mainly a financial services provider, but it also offers an ever-expanding prediction markets trading section.
Prediction Trade Contracts at Robinhood
At Robinhood, you can engage in buying, selling, and settling trade contracts valued between $0.01 and $0.99 each relating to a number of different real-world predictions. The available categories include:
- Sports
- Chess
- Climate
- Crypto
- Economics
- Elections
- Education
- Entertainment
- Financial
- FX
- Metals
- Politics
- Technology
For example, when I wrote this guide, there was a live prediction for the price of Gold at the end of March. If I thought it would be over $4,650, I could buy “yes” trade contracts for this option at $0.98 each. I would then have the option of selling these contracts if the price moved in my favor. OR, I could simply hold the contracts and wait for the deadline to pass.
At this point, if indeed the price of Gold was above $4,650, my trade contracts would settle and I would get a fixed $1 return for each contract, minus any fees.
And that is why I’ve written this article - minus any fees. Fees play an important role in prediction trading at this site, whether you’re looking at Robinhood sports predictions or any of the other supported categories. This is because you are engaging in peer to peer trading, and the facilitating company who processes the trades, i.e. Robinhood will make commission in the form of fees.
These ultimately impact the viability of buying and selling trade contracts, and the potential return you can get if you hold and settle them.
Pros and Cons of Robinhood Predictions
I’ve become a huge fan of the Robinhood predictions market setup and I think it’s quickly becoming one of the better options for US traders due to the range of prediction markets it offers, its high-quality website and mobile app, and the simple free structure - it’s beginner friendly for those who might be just starting out trading predictions.
However, the customer support availability could be better, and I’m not a fan of the potential variance that can come because of the exchange fees that you can be charged for each transaction.
Pros
- Low per-transaction fees
- Great variety of prediction markets
- Easy-to-use site and app
- Lots of sports predictions
Cons
- Variable exchange fees
- Support is hard to find
Robinhood Transaction Fees Explained
When I looked at Robinhood fees, I considered not only the trading fees relating to prediction markets, but general fees for things like deposits and withdrawals as these can equally affect your potential returns.
General Robinhood Fee Structure
There are some general fee considerations, but these mainly apply if you have a Robinhood credit card:
- $2.50 ATM withdrawal fee for your Robinhood card.
- No inactive account fees.
- No transfer fees for depositing or withdrawing.
I’m a big fan of this approach in terms of deposit and withdrawal fees as it means you get to trade with 100% of the original money you intended. Just be aware that this could vary, and this is based on my experience. You also might have to consider transaction fees for your payment provider, NOT just Robinhood itself. For instance, PayPal can have transferral charges, as can some credit cards.
Always make sure you understand how the fee structure of your payment provider works before making any transactions.
Robinhood Fees Per Contract
There ARE Robinhood fees for the trading of prediction contracts. However, these are especially simple, and I think they will have a minimum impact on your overall potential return. I’ve provided a breakdown of the fees for different potential actions relating to $1 Robinhood trade contracts:
| Robinhood Trade Contract | Action | Fee per Contract | Robinhood Trade Contract |
|---|---|---|---|
| $1 Trade Contract | Buy | $0.01 | $1 Trade Contract |
| $1 Trade Contract | Sell | $0.01 | $1 Trade Contract |
| $1 Trade Contract | Settle | N/A | $1 Trade Contract |
| $1 Trade Contract | Exchange Fee | Variable | $1 Trade Contract |
The first three types of fees are easy - you are charged $0.01 on each trade contract that you buy and sell, but there are no fees if your trade contract successfully settles. So, for example, if you bought 100x $1 trade contracts at 89c each for a sports prediction on the LA Lakers to win, you would pay $100 x $0.01 or $1.00 in fees.
However, from what I can understand, and my testing, as Robinhood doesn’t directly facilitate the trades, but uses other exchanges as a type of middleman for the P2P transactions, there can also be an exchange fee per transaction. From my time testing the site and buying trade contacts, this is usually no more than $0.01, so potentially your total fee for buying or selling trade contracts could be $0.02 which equals 2% which isn’t huge.
There is an easy way to see exactly what Robinhood fees you will be paying though. If you login to your account and open a prediction market, for instance Robinhood election predictions, you want to trade on, you will see a price breakdown on the right-hand side. There is a box where you can enter the number of trade contracts you want to buy - put a number in here, and it will show your potential return if the contracts settle, minus any fees.
How I Signed up at Robinhood to Start Trading Predictions
To get involved trading Robinhood event contracts, including sports predictions, you have to have an account. You will be creating a generic account that gives you access to all the company’s features such as its investment options, banking, AND prediction markets. When I registered here, I had to go through the following steps:
- Use our Robinhood banners.
- Click the sign up button.
- Select your region.
- Enter the personal details.
- Accept the site T&Cs.
- Complete verification.
- Log in to your account.
You can do this via the desktop website or the Robinhood app - both work exactly the same. For verification, you might need to verify your email and phone number, plus upload ID documents to complete a KYC check. This can vary depending on your location though, so your experience might be different to mine.
When you’ve created your account, you can credit it using one of the available payment methods, and then browse the different categories on the site. As I mentioned, when you click on an individual trade contract option, you should see a box on the right-hand side which shows your estimated return if your contract settles, including any fees.
Conclusion - Robinhood Has a Simple Trading Fee Structure
I think that the Robinhood fees are some of the best you can find, both from a value and usability perspective. I really like the flat $0.01 trading fee for buying and selling and this is much lower than some other contenders I’ve tested. On top of that, it makes things easier to understand as there are no variable fees, and the site also gives you an estimated return including fees when you are browsing the different prediction markets.
You just have to be aware of the potential small exchange fees that can also be applied depending on which exchange is executing the trade on behalf of Robinhood. Still, this only adds up to a minor overall percentage of your trade contract value, and I think it leaves you plenty of trading flexibility. To start trading predictions at Robinhood yourself, just use the banners I’ve placed on this page and go through the registration process.
