Robinhood Sees Surge in Prediction Market Product Line
Robinhood, the popular trading platform, reported robust growth in its prediction markets product line in terms of revenue. The company is planning to expand this business avenue, stating a new futures and derivatives exchange and clearinghouse are on the horizon.
Robinhood rolled out its prediction markets in March 2021, in partnership with the prediction market platform, Kalshi. The platform has witnessed immense trading activity since, with nine billion contracts traded by over one million users, as per a statement from Robinhood on Tuesday.
Consumer Demand Fuels Expansion Plans
JB Mackenzie, the general manager of futures and international at Robinhood, highlighted strong customer demand for prediction markets. The trading platform’s users have shown an increasing interest in leveraging its services, prompting the company to focus on fulfilling this rising consumer desire. Robinhood is eager to build on this momentum as it ventures deeper into the world of prediction markets.
Infrastructure Enhancement and New Partnerships
Robinhood aims to deepen its investment in prediction markets, expecting an upgrade in its infrastructure to aid in the delivery of a better customer experience, innovative products, and an enhanced trading platform.
The new exchange will have Robinhood as the controlling partner and the market maker. Susquehanna International Group will become a key ally as the day-one liquidity provider. As a part of this venture, Robinhood is set to acquire MIAXdx, a Commodity Futures Trading Commission (CFTC) licensed derivatives clearing organization, and swap execution facility. The projected date for the derivatives exchange to begin operations is set for 2026.
Prediction Markets Gain Popularity in Crypto Offerings
Prediction markets have evolved as one of the hottest crypto offerings of the year, with sturdy volumes on platforms like Kalshi and Polymarket amid heightened mainstream media attention. The exchange, Kalshi, is a fully-regulated prediction market platform in the US operating under the auspices of the CFTC with a trading volume of $4.47 billion over recent times. On the other hand, Polymarket, a US-based cryptocurrency-based prediction market, recorded $3.58 billion in trading volume over the last month.
New Entrants in the Market
Crypto.com has recently started offering a prediction market platform that will soon be integrated with Trump Media. Another operator, Crypto exchange Gemini, is planning to launch its prediction market platform. This move is part of the company’s initiative to roll out a ‘super app’, and they have filed with the Commodity Futures Trading Commission for the necessary permissions.
Meanwhile, certain website data indicates that Coinbase is also considering entering the prediction market scene. Tech researcher Jane Manchun Wong shared her findings about this development, which suggests that the prediction market might see more competition in the future.
Conclusion
The rise in popularity of prediction markets among various trading platforms is evident, and Robinhood’s successful foray into this domain validates the growing interest in these markets. The competition is set to intensify with other major trading platforms showing keen interest in prediction markets. Evolving consumer demands and innovative products are set to write an interesting next chapter in the prediction markets segment in the coming years.
