Prediction markets, which permit customers to wager in actual time on all the pieces from elections to the Tremendous Bowl, are instantly huge enterprise and rising quick. Robinhood underscored that throughout the firm’s Q3 earnings announcement on Wednesday afternoon, stating that prediction markets have grown to $100 million in annualized income, and that income in October from the class eclipsed that of the whole earlier quarter.
Robinhood CEO Vlad Tenev spoke about prediction markets quite a few occasions throughout a dwell earnings occasion in San Francisco, the place he took questions from traders, analysts and reporters. However whilst Tenev portrayed prediction markets as an vital new pillar of development, he made clear Robinhood is unlikely to construct certainly one of its personal.
At present, the corporate depends totally on a partnership with Kalshi to offer the change underlying most of Robinhood’s prediction market choices. The startup, together with rival Polymarket, exploded in reputation in 2024 throughout the U.S. presidential election marketing campaign, thanks partially to a court docket ruling that overturned a longtime regulatory place that the majority prediction markets had been unlawful. Whereas Kalshi and Polymarket stay the dominant gamers, different challengers are rising.
Tenev mentioned Robinhood doesn’t intend to compete with these startups, however as a substitute that it’ll proceed to depend on its mass distribution channels to entice these corporations to enter partnerships.
“When we think about vertical integration … one thing we look at is, is the vertical integration going to be accretive to us? Is it going to be something that is increasingly commoditized over time? And my feeling for how this is going to evolve, in prediction markets at least, is there’s going to be a lot of entrants in the space, a lot of exchanges,” defined Tenev.
Robinhood’s Head of Brokerage, Steve Quirk, echoed these sentiments following the formal earnings presentation. When requested by Fortune whether or not the corporate would take into account buying Kalshi outright, Quirk mentioned he noticed no benefit to doing so for the reason that present enterprise association—which sees Robinhood take a minimize of each prediction market wager—is serving it properly.
The upshot is that Robinhood executives seem to consider they’ve an higher hand with regards to prediction markets because of the corporate’s huge distribution community, which Tenev mentioned numbers over 26 million U.S. clients, and spans cellular and desktop channels.
The overwhelming majority of latest prediction markets development has come from sports activities betting, a class that has come on-line solely not too long ago resulting from authorized uncertainty. Betting on school soccer and the NFL possible helped Robinhood publish, in line with the corporate, 2.5 billion prediction market contracts in October.
The dialogue got here as Robinhood posted third quarter outcomes that beat analyst expectations for each income and earnings.
