Prediction markets, which allow users to bet in real time on everything from elections to the Super Bowl, are suddenly big business and growing rapidly. Robinhood confirmed that during the company’s third-quarter earnings call Wednesday afternoon, noting that prediction markets had grown to $100 million in annual revenue, and that revenue in October from this category exceeded revenue for the entire previous quarter.
Vlad Tenev, CEO of Robinhood, spoke about prediction markets several times during a live earnings event in San Francisco, where he took questions from investors, analysts and reporters. But even as Tenev portrayed prediction markets as an important new pillar of growth, he made clear that Robinhood was unlikely to build one of its own.
Currently, the company relies primarily on a partnership with Kalshi to provide the exchange underpinning most of Robinhood’s prediction market offerings. The startup, along with its competitor Polymarket, gained popularity in 2024 during the US presidential election campaign, thanks in part to a court ruling that overturned a long-standing regulatory position that most prediction markets were illegal. While Calci and Polymarket are still the dominant players, other competitors are beginning to emerge.
Robinhood does not intend to compete with these startups, but instead will continue to rely on crowdsourced distribution channels to entice those companies into partnerships, Tenev said.
“When we think about vertical integration…one thing we look at is: Is vertical integration going to be accretive to us? Is it going to be something that’s increasingly commoditized over time? And my feeling about how this will evolve, in prediction markets at least, is there’s going to be a lot of entrants, a lot of exchanges,” Tenev explained.
Steve Quirk, head of brokerage at Robinhood, echoed those sentiments after the official earnings presentation. When asked who luck If the company were to consider acquiring Kalshi outright, Quirk said he didn’t see any benefit in doing so because the current trading arrangement — which sees Robinhood taking a cut of every prediction market bet — serves it well.
The result is that Robinhood executives seem to believe they have the upper hand when it comes to prediction markets thanks to the company’s massive distribution network, which Tenev said numbers more than 26 million U.S. customers, spanning across mobile and desktop channels.
The vast majority of recent prediction market growth has come from sports betting, a category that has only recently come online due to legal uncertainty. Betting on college football and the NFL likely helped Robinhood deploy 2.5 billion predictive market contracts in October, according to the company.
The discussion came as Robinhood posted third-quarter results that beat analysts’ expectations in terms of revenue and profits.
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