March 17 (Reuters) - Trading platform Robinhood

on Monday launched a prediction markets hub in its app that

allows customers to trade on event outcomes, including the

expected upper limit of the Federal Reserve funds rate in May.

The company, which has become synonymous with retail

investors in the U.S., is looking to cash in on the growing

demand for event-based derivative contracts, once a niche asset

class.

Event-based derivatives are gaining traction as traders seek

to bet on real-world outcomes, such as Fed decisions or

elections, offering a straightforward, all-or-nothing payoff

tied to specific events.

However, the rise of event-based derivatives trading has

drawn regulatory scrutiny, with concerns over gambling-like

risks and the potential for market manipulation.

Robinhood shares were last up 1.7% in premarket trading on

Monday.

In February, Robinhood scrapped event contracts allowing

users to bet on the Super Bowl outcome just a day after launch,

following a request from the U.S. Commodity Futures Trading

Commission.

The move came after its wildly popular launch of contracts

to bet on the U.S. presidential election in October.

Robinhood said it has been in close contact with the CFTC in

recent weeks and looks forward to continuing to work with the

regulator.

"Businesses and investors can use these markets to hedge

against uncertain events and associated risks, such as election

outcomes, regulatory changes, or economic shifts," Robinhood

said in a recently released policy statement on the products.

The launch furthers the trading platform's strategy of

evolving into a comprehensive financial services provider and

competing with established brokerages catering to institutional

clients.

Its prediction markets will initially be available across

the U.S. through KalshiEX LLC, a CFTC-regulated exchange, the

company said.

Robinhood added that eligible customers will also be able to

bet on the results of the upcoming men's and women's college

basketball tournaments.