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 highlighted this during the company’s third-quarter earnings announcement Wednesday afternoon, saying prediction markets reached $100 million in annualized revenue and the category’s October revenue eclipsed that of the entire previous quarter.
Robinhood CEO Vlad Tenev spoke several times about predicting markets during a live earnings event in San Francisco, where he took questions from investors, analysts and reporters. But even as Tenev described prediction markets as an important new pillar of growth, he made it clear that Robinhood probably wouldn’t create one.
Currently, the company primarily relies on a partnership with Kalshi to provide the exchange underlying most of Robinhood’s prediction market offerings. The startup, along with rival Polymarket, exploded in popularity in the 2024 U.S. presidential election campaign, thanks in part to a court ruling that overturned a long-standing regulatory position that most prediction markets were illegal. If Kalshi and Polymarket remain the dominant players, other challengers are emerging.
Tenev said Robinhood has no plans to compete with these startups, but will continue to rely on its mass distribution channels to entice these companies into partnerships.
“When we think about vertical integration… one thing we look at is: Is vertical integration going to be accretive for us? Is this going to be something that becomes more and more commodified over time? And my sense of how this is going to evolve, at least in the prediction markets, is there going to be a lot of entrants into the space, a lot of trading,” Tenev explained.
Robinhood’s head of brokerage, Steve Quirk, echoed these sentiments after the official results presentation. Asked by Fortune While the company would consider acquiring Kalshi outright, Quirk said he sees no benefit in doing so since the current business deal — which sees Robinhood take a cut of every prediction market bet — serves it well.
The result is that Robinhood executives appear to believe they have the upper hand when it comes to predicting markets thanks to the company’s vast distribution network, which Tenev says has more than 26 million U.S. customers and spans mobile and desktop channels.
The vast majority of recent growth in prediction markets 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 publish, according to the company, 2.5 billion prediction market contracts in October.
The discussion came as Robinhood reported third-quarter results that beat analysts’ expectations for revenue and earnings.
