Oct 28 (Reuters) - Robinhood said on Monday it

will allow trading in U.S. presidential election event

contracts, as it seeks to capitalize on growing retail demand

for betting products.

This will offer investors on its platform a chance to profit

from speculating the results of the tightly contested race

between Vice President Kamala Harris and former President Donald

Trump.

The trading platform's shares rose 3% before the bell after

the company said it will start rolling out the contracts to a

limited number of users on Monday who must be citizens of the

United States.

Event derivatives trading involves buying and selling

contracts that allow traders to speculate on the outcome of

specific events such as elections, economic data releases, or

policy decisions.

These types of derivatives, which are relatively new and

generally considered high risk compared to traditional financial

instruments, have gained traction in recent years.

PredictIt, a real-money prediction market platform where

users can buy and sell shares on the outcomes of future events,

has also gained significant popularity this year in the lead-up

to the election.

A federal judge in September ruled to allow Americans to use

derivatives for event betting, marking a setback for the U.S.

Commodity Futures Trading Commission, which had sought to block

them. An appeals court upheld the order in October.

Robinhood introduced futures and index options trading

features to its mobile app, for a fee, earlier this month,

marking a shift from its traditional commission-free trading

model.

The company, which became synonymous with mom-and-pop

investors in 2021, is now aiming to evolve into a comprehensive

financial services provider and compete with established

brokerages catering to institutional clients.

It committed earlier this year to expanding margins and

prioritizing "profitable growth" in 2024. Investor enthusiasm

has fueled a year-to-date jump of more than 100% in the

company's stock.