Robinhood's Prediction Markets Hit $200M Run-Rate
Partnership with regulated exchange Kalshi is fueling explosive growth in event-based contracts, signaling a significant new revenue stream for the fintech firm.
Robinhood Markets (HOOD) is seeing a significant acceleration in its event-contracts business, with September revenue from its prediction markets hub pacing at an annualized rate exceeding $200 million. The surge is largely attributed to a partnership with Kalshi, a U.S.-regulated prediction market, and has been fueled by surging volumes in contracts tied to NFL and college football games.
The collaboration allows Robinhood users to speculate on the outcomes of various real-world events directly within the Robinhood app. This move into represents a strategic push by Robinhood to diversify its revenue streams beyond its core stock and crypto trading offerings.
The timing of this growth coincides with a broader explosion in the popularity of prediction markets, which are increasingly seen as a more accurate forecasting tool than traditional polling. Kalshi, in particular, has emerged as a dominant force in the sector. The platform's market share of global prediction market volume soared to over 62% in September, a dramatic increase from just 3.1% a year prior, with trading volumes hitting $1.3 billion for the month.
This deeper foray into prediction markets could be a game-changer for Robinhood, with some analysts projecting that the venture could add as much as $16 billion to its market capitalization. However, the initiative is not without its challenges. The expansion has drawn scrutiny from the Commodity Futures Trading Commission (CFTC) and various state gaming authorities, who have raised concerns that these event contracts could be considered a form of unregulated gambling.
Despite the , the growth of the prediction market industry shows no signs of slowing down. The sector is projected to reach a value of $95.5 billion by 2035, according to some industry forecasts. For Robinhood, the successful integration of Kalshi's offerings provides a significant first-mover advantage in a rapidly expanding market, positioning the company to capture a substantial share of this new and lucrative field of speculative trading.