Robinhood Capitalizing on Some Non-Sports Prediction Markets

Robinhood Markets (NASDAQ: HOOD) is rapidly asserting itself in the prediction market industry and its growth in that arena isn’t solely attributable to sports derivatives.

While data confirm that sports event contracts continue accounting for a massive percentage of turnover on yes/no exchanges, Robinhood is capturing growth in some prominent non-sports categories, including commodities and cryptocurrency.

Rothera, the prediction market that’s a joint venture between Robinhood and Susquehanna International Group, handles a fair chunk of Robinhood’s sports derivative volume, but financial event contracts are sourced through a partnership with a leading prediction market operator.

Crypto Contracts Contributing to Prediction Market Growth

Mackenzie’s noting that Bitcoin event contracts are driving growth on Robinhood’s prediction market jibes with data confirming cryptocurrency derivatives volume is soaring across all-or-nothing exchanges this year.

With traders displaying enthusiasm for timed Bitcoin event contracts, in some cases in intervals as short as five or 15 minutes, cryptocurrency represents one of the fastest-growing non-sports categories for the prediction market industry.

“It started off with a week. It’s moved to a day, and now we’re down to 15 minutes,” said Mackenzie at the conference.

Robinhood is well-positioned to capitalize on the growth of digital currency event contracts because the company features a broad-based cryptocurrency trading platform, confirming that many of those clients are already allocated to or interested in the asset class. Likewise, some signs point to active crypto traders being devoted sports bettors and prediction market traders.

Robinhood Using Prediction Markets as a Funnel

Robinhood has consistently noted that prediction markets are its fastest-growing business in company history and that growth is paying off in other ways. At the NEXTPredict Summit, Mackenzie said that many of the traders that come to the company for event contracts exposure end up exploring other asset classes, including cryptocurrency, equities and options. Some even evaluate Robinhood’s retirement-planning accounts and services.

Prediction market traders who also embrace crypto and options trading are desirable clients for brokerages like Robinhood because they become fee generators. Likewise, event contract traders that open retirement accounts with the firm boost its assets under management.

“What you see them do is almost immediately start to build out into equities, crypto, futures, options,” said Mackenzie.