Prediction markets, which allow users to bet in real time on everything from elections to the Super Bowl, are suddenly big business and growing fast. Robinhood highlighted during its Q3 earnings call on Wednesday afternoon that prediction markets have reached $100 million in annualized revenue, with October's revenue from the The category's performance surpassed that of the entire prior quarter.
TL;DR
- Prediction markets generate $100 million yearly, with Robinhood partnering with Kalshi.
- Robinhood CEO Vlad Tenev indicated the company won't develop its own prediction market.
- Robinhood leverages its 26 million users to encourage collaborations with prediction market firms.
- Sports betting, especially NFL and college football, drives recent growth in prediction markets.
During a live earnings event in San Francisco, Robinhood CEO Vlad Tenev discussed prediction markets multiple times while fielding questions from investors, analysts, and reporters. While Tenev highlighted prediction markets as a significant new avenue for expansion, he indicated that Robinhood itself probably won't develop one.
Most of Robinhood's prediction market offerings currently depend on a partnership with Kalshi for the underlying exchange. In 2024, the startup and its competitor Polymarket saw a surge in popularity during the U.S. The presidential election campaign gained momentum, partly due to a judicial decision that reversed a long-standing regulatory stance, deeming most prediction markets unlawful. As Kalshi and Polymarket remain the dominant players continues, new competitors are appearing.
Tenev stated that Robinhood has no plans to compete with these emerging companies; rather, it will continue to leverage its widespread distribution networks to encourage those firms to form collaborations.
Regarding vertical integration, a key consideration is whether it will prove beneficial to our operations. Will this become more of a commodity as time goes on? Tenev stated, "My prediction for how this will develop, at least in prediction markets, is that we'll see numerous new participants and exchanges entering the field."
Following the official earnings presentation, Robinhood's Head of Brokerage, Steve Quirk, shared similar views. When questioned by Fortune about the possibility of Robinhood purchasing Kalshi entirely, Quirk stated he perceived no benefit in such a move, given the existing business agreement where Robinhood receives a portion of each The prediction market bet is proving beneficial.
Essentially, Robinhood's leadership seems to feel they possess an advantage in prediction markets due to the company's extensive reach, which Tenev indicated comprises more than 26 million U.S. Users. Across mobile and desktop platforms, serving its clientele.
Sports betting, a sector only recently brought online due to legal ambiguity, accounts for the overwhelming majority of recent growth in prediction markets. Betting on college football and the NFL likely helped Robinhood post, according to the company, 2.5 billion prediction market contracts in October.
Robinhood's third quarter performance, which surpassed analyst projections for both revenue and earnings, was the backdrop for this conversation.