Robinhood says prediction market grew sevenfold in a year and sees potential to rival the stock market

Robinhood says its prediction markets business has grown sevenfold in a year and that the segment is just at the beginning of a supercycle that, over the long term, could reach the size of the U.S. stock market. The assessment was made by the company's chief financial officer, Shiv Verma, in an interview with Yahoo Finance's executive editor, Brian Sozzi.

According to Verma, the company reported record revenue and EBITDA the previous day, with historic highs also in shares, options and margin. He said the core business is "full steam ahead" and that the company is bullish on cryptocurrency infrastructure, even though it does not control the price of tokens.

Diversification beyond sports

One of the central points of the interview was the change in the profile of contracts. According to Verma, 30% of contracts negotiated in the quarter were non-sports, compared to 15% in the previous quarter. He cited interest in economic contracts on Fed decision day, midterm elections (Robinhood redesigned the hub dedicated to the topic), commodities and even cryptocurrencies.

The executive said that the product found "market fit" outside of sport. To explain the attraction, he stated that it is a simple way of expressing a vision, with visible probabilities and applicable to various asset classes. He also mentioned operational indicator contracts (KPI), launched at the Hood Summit event, which allow betting, for example, on how many iPhones Apple will sell, without assuming the so-called basis risk in relation to the share.

Scale compared to the stock market

The numbers show the size of the distance to travel. Verma said the quarterly volume in prediction markets is about 6 billion, while the platform moves about 10 billion a day in stocks. For the executive, the addressable market could be comparable to that of American stocks, as the product, currently aimed at US retail, receives institutional clients and expands globally. According to him, the company already receives inquiries from interested institutions.

Verma rejected the idea that the new product will drain investors of stocks and funds. In the executive's view, each launch tends to be additive, and those who use event contracts would have a greater chance of having a retirement account on the platform.

In the partnership with Crypto.com, which will be Robinhood's second exchange in this segment, the company states that, by the end of the year or the beginning of next, most of the volume will go to the exchange itself, as a result of the joint venture, or to Crypto.com. The promise is a uniform price for customers in both stores. Robinhood will also have an equity stake in Crypto.com.

Crypto, AI agents and the Anthropic IPO

On the cryptocurrency front, Verma said that Robinhood Chain, a decentralized network focused on creating real-world assets such as tokenized stocks, generated around 50 million in gross revenue in its first full quarter. He stated that the main uses are real assets and memes, independent of the price of the tokens, and that developers are asking for lower fees and more tools.

The executive also detailed the accounts for AI agents: the client creates a separate account, with its own resources, so that the agent does not access the rest of the assets, and the order is only executed with the user's approval. According to Verma, the initial use is mainly for research.

Regarding Anthropic's IPO, Verma said that Robinhood Ventures does not have the company in its portfolio, but it owns names like OpenAI and Databricks. For him, the IPO is another sign that large companies in the sector will go to the public market, and he cited the company's growth of 1,300% per year as something notable. The projections, it is worth noting, are from the executive of a company with a direct interest in the topic.

Automatically translated from Portuguese.