Robinhood Prediction Markets Outpace Transaction Revenue

Robinhood’s strategic pivot into prediction markets is yielding dramatic results, with Compass Point analysts projecting the segment generated approximately $20 million in third-quarter revenue—representing a stunning 100% quarter-over-quarter increase. This explosive growth significantly outpaces the 35% expansion expected in Robinhood’s traditional transaction processing revenue, signaling a fundamental shift in the company’s revenue composition. The timing aligns perfectly with autumn’s professional sports calendar, as Robinhood began letting customers wager on NFL and college football games in August through its partnership with prediction market platform Kalshi.

The analysts project even stronger performance ahead, forecasting $50 million in fourth-quarter prediction market revenue “alongside a full quarter of NFL season.” This projection underscores how America’s most popular pastime is becoming a notable tailwind for the retail brokerage. Despite offering commission-free trading on stocks and cryptocurrencies, Robinhood charges customers a one-cent fee on trades involving event contracts—a pricing strategy that appears to be paying dividends as prediction markets gain mainstream traction.

Robinhood’s prediction market success follows significant regulatory breakthroughs that have reshaped the industry landscape. Last year marked a turning point for prediction markets in the U.S., as platforms like Polymarket and Kalshi processed billions of dollars in wagers on whether President Donald Trump would win re-election. This demonstration solidified their utility as alternatives to traditional political polls and paved the way for broader adoption. Robinhood entered the presidential prediction market with only weeks remaining in the contest, following Kalshi’s legal victory over the Commodity Futures Trading Commission.

The CFTC had attempted for years to block Kalshi from offering contracts on the U.S. presidential election through court challenges, but these efforts ultimately proved unsuccessful. After pushing back against a federal judge’s ruling, the regulator abandoned its appeal efforts in May, creating clearer regulatory pathways for prediction market expansion. Robinhood is now capitalizing on this opening, with Bloomberg reporting last month that the firm is speaking with UK regulators about bringing prediction markets to new international markets.

The lines between financial services and sports betting companies are increasingly blurring, with DraftKings recently entering the prediction market arena through its acquisition of prediction market exchange Railbird. This industry convergence highlights the growing recognition of prediction markets as a legitimate revenue stream beyond traditional gambling. Robinhood’s diverse prediction market offerings—which extend beyond sports to include economics, culture, and technology—position the company to capture multiple growth vectors as consumer interest in event-based trading expands.

Compass Point maintains a “buy” rating on HOOD stock, significantly raising its price target from $105 to $161—a mark that would represent a new all-time high for Robinhood, surpassing the previous record above $153 set earlier this month. The investment bank points to prediction market growth alongside revenue from crypto trading fees and staking rewards as key catalysts for continued stock appreciation. Market sentiment appears to align with this optimistic outlook, as Robinhood shares rose more than 5% to nearly $146 following the analysts’ Monday note, with the company scheduled to report third-quarter earnings after markets close on November 5.

As Robinhood prepares to disclose its Q3 results—with analysts expecting earnings per share of $0.54 on $1.2 billion in revenue—the company’s prediction market performance will be closely watched as an indicator of its ability to diversify beyond traditional brokerage services. The rapid adoption of these new offerings suggests Robinhood is successfully navigating the convergence of financial services, cryptocurrency, and event-based trading, potentially establishing a new paradigm for retail investing platforms in the process.