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Prediction Markets a Key Driver in Reshaping Robinhood's Revenue Mix

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Key Takeaways

  • Robinhood's prediction markets rapidly reached $100M in annualized revenues and drove record Q3 profit.
  • HOOD handled 2.3B event contracts in Q3 2025 and 2.5B more in October as user demand accelerated.
  • Robinhood's expanding event-contract lineup is diversifying its model and boosting revenue momentum.

Robinhood Markets’ (HOOD - Free Report) rapid expansion into prediction markets has emerged as one of the most significant catalysts reshaping its business in 2025. The company holds nearly 30-35% market share in the U.S. prediction market event contract trading. Senior leaders, including CEO Vlad Tenev and Chief Brokerage Officer Steve Quirk, have repeatedly emphasized that prediction markets are “the fastest-growing business we’ve ever had,” eclipsing even the early boom of crypto trading on the platform. 

By enabling users to trade on real-world outcomes ranging from elections to economic data releases, the product has tapped into a massive new vein of user demand. This momentum is reflected in the numbers: prediction markets became the quickest business line in Robinhood’s history to reach $100 million in annualized revenues. The company handled 2.3 billion event contracts in the third quarter of 2025 and another 2.5 billion contracts traded in October alone.

The surge in prediction-market activity helped drive a doubling of Robinhood’s quarterly revenues year over year and contributed to a record net profit in the third quarter of 2025. Management has credited this segment with reshaping the company’s revenue mix. 

The prediction markets' growth has expanded Robinhood’s business model beyond traditional brokerage and crypto, creating a more diversified and resilient earnings stream. The company now stands at the forefront of a broader trend toward entertainment-driven, outcome-based trading that resonates strongly with younger investors.

Looking ahead, expectations remain high as Robinhood deepens its event-contract offerings and expands into new verticals that capitalize on millennial and Gen Z engagement patterns. With billions of contracts traded and strong month-over-month momentum, prediction markets have quickly evolved from an experimental feature into a cornerstone of the company’s strategic direction. This segment is poised to remain a key revenue driver and a defining competitive advantage for the platform’s next stage of growth.

Others Responding to the Surge in Prediction Markets

Several firms, including Cboe Global Markets (CBOE - Free Report) and CME Group (CME - Free Report) , are taking a significant interest in the prediction markets business.

Cboe Global is entering prediction markets with plans to launch event-based contracts tied to economic data and financial outcomes, positioning itself beyond traditional exchange offerings and toward next-generation speculative products. The move aligns with growing trader interest in outcome-driven instruments and leverages Cboe Global’s strength in regulated derivatives.

CME Group is taking a more consumer-focused route by partnering with FanDuel to launch “FanDuel Predicts” in December 2025. The platform will allow users to trade event contracts on sports results and key benchmarks such as the S&P 500, oil, gold, crypto and major economic indicators. By combining CME Group’s derivatives infrastructure with FanDuel’s broad user base, the initiative aims to bring a new wave of retail participants into regulated event-driven trading.

Robinhood’s Price Performance, Valuation & Estimate Analysis

Over the past year, shares of HOOD have skyrocketed a whopping 228.8%. In the same time frame, the industry has surged 28.4%.

 

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Given the impressive price performance, HOOD shares are currently trading at a massive premium to the industry. The company has a 12-month trailing price-to-tangible book (P/TB) of 14.04X compared with the industry average of 2.94X.

 

Zacks Investment Research
Image Source: Zacks Investment Research

The Zacks Consensus Estimate for Robinhood’s 2025 and 2026 earnings implies year-over-year growth of 78% and 16.2%, respectively. In the past month, earnings estimates for 2025 and 2026 have been revised upward to $1.94 and $2.26, respectively.

 

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Image Source: Zacks Investment Research

HOOD currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.


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