The distinction between stock trading and outright gambling gets fuzzier still.

I'm David Brancaccio on this week before the election, the online trading platform Robin Hood has started allowing its customers to bet on who wins,

the vice president or the former president.

It's not the first to wait into betting on U.S. elections, but it is among the first in the US to jump

into a new kind of financial instrument called event contracts.

Marketplace is Nova Savo, what are those?

Yeah, event contracts as in yes or no bets on whether something's going to happen. Now depending on who you ask, this is either nothing more than gambling or a novel investing tool. Now the Commodities Futures Trading Commission, which is the agency that regulates this kind of trading known as derivatives,

has gone to court to stop election betting, but it is lost twice now.

And here we are David with Robin Hood launching this new product.

Why are regulators trying to stop this?

So they're concerned about market manipulation and with it manipulation of voter perceptions,

but Regiv Settie, professor of economics at Barnard College who has

done some research on these markets, told us that the jury is really still out but perhaps

they can be useful because they take in new information faster than polls.

If you look at what the statistical models were saying about the 2024 election on July

18th, they were publishing forecasts which gave Trump maybe around a

75% chance of winning and Biden 25% and everybody else 0%. Meanwhile markets had Biden at less than 5% and had Harris at about 22 or 23%.

Because they were anticipating that Biden would drop out, which he did.

Now, SETI also says one upside of what's happening at Robin Hood and at other trading

firm called Kalshi is that bringing political betting under U.S. regulatory oversight

can be a good thing.

Other platforms are based overseas David.

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