eToro in Talks with Kalshi, Polymarket as it Eyes Prediction Markets

• Brokerage firm says it’s in talks with prediction markets giants
• Says futures market expansion provides infrastructure for event contracts
• Sees some intersection with cryptocurrency

eToro Group (NASDAQ: ETOR) could be preparing to join the ranks of brokerage houses in the prediction markets space, with the company confirming it’s holding talks with Kalshi and Polymarket to that effect.

On the company’s third-quarter earnings conference call on Monday, co-founder, CEO, and Chairman Jonathan Assia noted eToro is having conversations with Kalshi and Polymarket, the two largest prediction market operators.

“We are talking to Kalshi and Polymarket, obviously, the market leaders in prediction markets. And we are excited about exploring the path of our users to be able to trade prediction markets on financial events,” said Assia in response to a question from Needham analyst John Todaro.

The eTorro chief executive officer added the company’s recent expansion into futures trading provides it with “the infrastructure to support prediction markets in the future.”

“We’ve launched futures in Europe, and the future rails that we’ve launched in Europe are the same rails that eventually enable basically to trade prediction markets in the US as well,” said Assia in response to a query from TD Cowen analyst William Katz.

eToro Could Be a Formidable Prediction Markets Player

There’s no shortage of fintech and brokerage firms moving into the prediction markets space. Crypto.com is one of the earliest financial services entrants in the industry while, by some estimates, Robinhood Markets (NASDAQ: HOOD) drives as much as 35% of Kalshi’s volume on any given day.

Add to that, CME Group (NASDAQ: CME) is partnering with FanDuel on event contracts, while Intercontinental Exchange (NYSE: ICE) recently took a $2 billion stake in Polymarket.

Last week, Gemini Space Station (NASDAQ: GEMI), the digital currency exchange controlled by Cameron and Tyler Winklevoss, indicated it too could explore prediction markets.

The brokerage house also had $1.2 billion in cash and cash equivalents as of September 30, confirming it has the resources to spend on prediction markets efforts, if needed.

eToro Not Necessarily Sports Event Contracts

While eToro appears bullish on prediction markets, it’s not overtly declaring readiness to get involved with sports event contracts. That could be a smart move on the company’s part because sports derivatives are bringing legal and regulatory scrutiny onto companies like Kalshi.

We do believe that prediction markets on financial events, on geopolitics, on economic events have — do create significant value and people thinking about their trading strategies or hedging what they want to do,” said Assia on the conference call. “And that initially will be our focus to help our customers basically find those financial opportunities that are related to their portfolios.”

He did, however, make clear that eToro sees opportunities at the intersection of cryptocurrency and prediction markets.

“In addition, we are launching our crypto wallet, which will enable our customers to engage with on-chain prediction markets such as poly-chain and others,” said the executive.