Robinhood is responsible for a “substantial” volume of trades on partner Kalshi’s site, according to CFO Jason Warnick, as the retail trading platform revealed that it processed 2.3 billion event contracts in the third quarter.
In the month of October, which fell outside the Q3 reporting period, Robinhood, which offers prediction markets through a partnership with Kalshi, handled 2.5 billion event contracts, with Robinhood Vladimir Tenev CEO asserting that the offering was “really on fire”.
Of the total $1.27bn (£970.5m) revenue reported for Q3, $730m was designated transaction-based revenue, which includes prediction markets. This segment surged 129% year on year.
What’s more, it was revealed that prediction markets and Bitstamp – the crypto exchanged Robinhood acquired in June – are together generating around $100m in annualised revenue.
Speaking on the earnings call yesterday, 5 November, Warnick suggested that the company was responsible for “a very large chunk” of volume traded on Kalshi’s platform. He was responding to an analyst question about whether Robinhood’s trading volumes where purely from Robinhood.
He said: “The volumes we’re showing are the volumes that are on Robinhood. I’m sure Kalshi is counting the activity we send to them, which is quite substantial. For contracts we offer, I think a very large chunk of Kalshi’s volume is actually coming from Robinhood.”
Robinhood recently broadened its Prediction Markets Hub to offer politics, entertainment and technology besides sports and politics.
Tenev insisted Robinhood’s USP as a one-stop-shop platform for trading equities, crypto and event contracts gave it an advantage over other companies entering the red-hot prediction markets space in the US.
He said: “In prediction markets there’s going to be a lot of entrants in the space. In the same way that across equities and options, customers are well served because there’s a wide variety of venues that are competing on cost to offer great execution. I think prediction markets will evolve that way, too.
“In that world, the customer certainly benefits because different markets will compete for who offers the lowest cost. Our power continues to be in our distribution and offering a wide variety of products and services.
“We’re the only ones, currently, that have this powerful combination for traders – not just being able to trade prediction markets, but also crypto, options, equities and futures.
“I think it’s a great combination, and there are certain advantages for everything being in one place. I think we can keep pressing on that advantage. The product has continued to evolve at a pretty rapid pace, and I think you should expect that to continue or even accelerate.”
Tenev noted that Robinhood is now offering more than 1,000 markets, with new customers specifically seeking out the platform’s prediction markets offering.
He added: “We’ve increased the diversity of the contracts we offer tremendously in the past few weeks, launching entirely new categories. Now we’re offering over 1,000 live event contracts for customers to trade.
“We’re seeing a lot of adoption. It might not be surprising because we have a large established customer base; we see a lot of adoption from existing users but we’re seeing new customers as well. There are customers who join Robinhood because they want access to our prediction markets offering.”
Last month, New York Stock Exchange owner International Exchange (ICE) invested $2bn into Polymarket, which is poised to enter the US, following the acquisition of Commodity Futures Trading Commission-licensed derivatives exchange and clearing house QCEX for $112m.
Headed up by Shayne Coplan, who is now the world’s youngest self-made billionaire, Polymarket is seeking further investment that could value the business at between £12bn and $15bn.
FanDuel and DraftKings have also made preparations to enter the prediction markets space. FanDuel has signed a joint venture with CME Group, while rival DraftKings has acquired CFTC-licensed Railbird Exchange.
Neither operator has yet committed to offering sports event contracts; FanDuel is set to allow users to trade financial products like oil, gold and crypto, while DraftKings will offer contracts on politics and entertainment.
In August, Robinhood filed lawsuits against regulators in Nevada and New Jersey for attempting to block the rollout of the firm’s sports event contracts.
The post Robinhood accounts for “a very large chunk” of Kalshi’s volumes, says CFO first appeared on EGR Intel.
Retail brokerage reveals event contracts traded in October on its platform hit 2.5 billion, eclipsing the amount processed in the whole of the third quarter
The post Robinhood accounts for “a very large chunk” of Kalshi’s volumes, says CFO first appeared on EGR Intel.