According to Fortune, Robinhood’s prediction markets business has exploded to $100 million in annualized revenue, with October’s performance alone eclipsing the entire previous quarter. CEO Vlad Tenev revealed these numbers during Wednesday’s Q3 earnings event in San Francisco, where he repeatedly highlighted prediction markets as a major growth driver. The company processed a staggering 2.5 billion prediction market contracts in October alone, driven heavily by sports betting on college football and the NFL. Despite this massive growth, Tenev made clear Robinhood has no plans to build its own prediction market exchange. Instead, they’ll continue relying on partnerships, primarily with startup Kalshi, to power their offerings. The company’s third quarter results beat analyst expectations for both revenue and earnings.
The partnership play
Here’s the thing that struck me about Robinhood‘s approach: they’re basically admitting they’d rather be the distributor than the manufacturer. Tenev said they look at vertical integration and ask whether it would actually be “accretive” to them or if the space will become commoditized. His bet? Prediction market exchanges will become a crowded field with lots of players. So why compete when you can just take a cut of every bet placed through your massive platform?
Steve Quirk, Robinhood’s Head of Brokerage, was even more blunt when asked about acquiring Kalshi outright. He basically said “why bother?” when the current arrangement is working so well. That’s a pretty telling admission from a company that’s traditionally been pretty aggressive about controlling its own destiny.
The legal landscape shift
What’s really fascinating here is the timing. Prediction markets exploded in 2024 thanks to a court ruling that overturned the longstanding regulatory position that most of these markets were illegal. Suddenly, Kalshi and rival Polymarket went from niche curiosities to mainstream betting platforms. And Robinhood, with its 26 million U.S. customers across mobile and desktop, was perfectly positioned to ride that wave.
Think about it – they already had the payment infrastructure, the user base, and the brand recognition. All they needed was someone to handle the actual exchange mechanics. It’s basically the same playbook that’s worked for them in other areas: be the front door, let specialists handle the back end.
Where the money’s really coming from
Let’s be real – the vast majority of that $100 million in annualized revenue isn’t coming from people betting on election outcomes or climate policy. It’s sports betting, plain and simple. College football and the NFL are driving this explosion, which makes perfect sense given America’s obsession with sports gambling.
What’s interesting is that sports betting only recently came online for prediction markets due to legal uncertainty. Now that those barriers are falling, we’re seeing exactly what happens when you combine America’s love of sports gambling with Robinhood’s frictionless platform. The result? 2.5 billion contracts in a single month. That’s absolutely insane growth.
What this means for the industry
Robinhood’s stance creates an interesting dynamic. They’re essentially saying “we’ll provide the customers, you provide the expertise.” For companies like Kalshi, that’s both a blessing and a potential threat. The blessing is immediate access to millions of potential bettors. The threat? Robinhood could always decide to build their own exchange later, or play partners against each other.
And honestly, that’s probably the smart play for Robinhood right now. Why sink resources into building something when you can just collect rent on other people’s infrastructure? It’s the platform play perfected. But you have to wonder – at what point does the math change? When does $100 million in annual revenue become enough to justify bringing that capability in-house?
For now though, Robinhood seems perfectly happy being the middleman. And given those numbers, can you blame them?
