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Will Sports Betting Hurdles Slow Robinhood's Prediction Markets Push?
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Key Takeaways
Robinhood faces new sports contract restrictions in Connecticut and Michigan amid tougher state enforcement.
Event contract revenues hit $156 million in Q2, topping equities and crypto revenues as volumes surged.
Robinhood could face narrower market access, higher compliance costs and slower sports-led growth.
Robinhood’s (HOOD - Free Report) prediction markets expansion is colliding with tougher state gaming enforcement, and Connecticut and Michigan show how regulatory friction could slow a business that is becoming increasingly important to HOOD.
Last week, Connecticut ordered Robinhood and eight other platforms to immediately stop offering sports event contracts to residents, while issuing nearly 30 subpoenas tied to its broader investigation. The state says these products violate gaming and unfair-trade laws and warned that non-compliance could trigger civil or criminal penalties. Connecticut also noted that a federal judge ruled in August that sports event contracts constituted illegal unlicensed gambling and were not shielded by federal commodities law.
Michigan adds another constraint. Under a court-approved Sept. 4 agreement, Robinhood stopped offering new sports-related event contracts in the state by Sept. 9 and must close remaining customer positions by Oct. 9. Importantly, the restriction covers contracts traded on CFTC-regulated designated contract markets, including Kalshi and Robinhood-backed Rothera.
The timing matters. Robinhood generated $156 million of event contract revenues in the second quarter, up more than 10-fold year over year and above equities revenues of $129 million and crypto revenues of $100 million. Event contract volume reached 13.6 billion in the second quarter. August volume was 4.7 billion, down 23% sequentially but still 15 times the year-ago levels.
The two-state pullback will not derail Robinhood’s nationwide push, but additional state restrictions could limit market access, increase compliance costs and temper sports-driven growth. Until the federal-state jurisdiction dispute is resolved, regulatory uncertainty is likely to remain an overhang on this fast-growing revenue stream for HOOD.
HOOD’s Competitors in the Prediction Markets Business
Robinhood faces intense competition from Interactive Brokers (IBKR - Free Report) and Coinbase Global (COIN - Free Report) in the prediction markets business.
Interactive Brokers has created a unified prediction-market interface spanning its ForecastEx platform, Kalshi and CME Group, with orders routed toward the best available net price. Interactive Brokers plans to add more exchanges and remains focused on economically relevant events such as elections, climate and macro indicators, while expanding weather offerings into hurricane-landfall and insurance-risk contracts.
Coinbase Global is scaling even faster. Its prediction market contracts and revenues jumped 106% sequentially in the second quarter of 2026, pushing the business above $100 million in annualized revenues. Coinbase’s new crypto-binary experience drove roughly three times as many daily traders and four times the daily revenue versus May averages, while management plans to add combination trades.
Over the past six months, Robinhood’s shares have jumped 42.8% compared with the industry’s growth of 22.6%.
Image Source: Zacks Investment Research
HOOD shares are currently trading at a premium to the industry. The company has a 12-month trailing price-to-tangible book (P/TB) of 11.47X compared with the industry average of 3.27X.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for Robinhood’s 2026 earnings suggests a year-over-year increase of 2.9%. The trend is likely to continue next year, with earnings expected to jump 33%. In the past 30 days, earnings estimates for 2026 and 2027 have been revised higher to $2.11 and $2.81 per share, respectively.
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Will Sports Betting Hurdles Slow Robinhood's Prediction Markets Push?
Key Takeaways
Robinhood’s (HOOD - Free Report) prediction markets expansion is colliding with tougher state gaming enforcement, and Connecticut and Michigan show how regulatory friction could slow a business that is becoming increasingly important to HOOD.
Last week, Connecticut ordered Robinhood and eight other platforms to immediately stop offering sports event contracts to residents, while issuing nearly 30 subpoenas tied to its broader investigation. The state says these products violate gaming and unfair-trade laws and warned that non-compliance could trigger civil or criminal penalties. Connecticut also noted that a federal judge ruled in August that sports event contracts constituted illegal unlicensed gambling and were not shielded by federal commodities law.
Michigan adds another constraint. Under a court-approved Sept. 4 agreement, Robinhood stopped offering new sports-related event contracts in the state by Sept. 9 and must close remaining customer positions by Oct. 9. Importantly, the restriction covers contracts traded on CFTC-regulated designated contract markets, including Kalshi and Robinhood-backed Rothera.
The timing matters. Robinhood generated $156 million of event contract revenues in the second quarter, up more than 10-fold year over year and above equities revenues of $129 million and crypto revenues of $100 million. Event contract volume reached 13.6 billion in the second quarter. August volume was 4.7 billion, down 23% sequentially but still 15 times the year-ago levels.
The two-state pullback will not derail Robinhood’s nationwide push, but additional state restrictions could limit market access, increase compliance costs and temper sports-driven growth. Until the federal-state jurisdiction dispute is resolved, regulatory uncertainty is likely to remain an overhang on this fast-growing revenue stream for HOOD.
HOOD’s Competitors in the Prediction Markets Business
Robinhood faces intense competition from Interactive Brokers (IBKR - Free Report) and Coinbase Global (COIN - Free Report) in the prediction markets business.
Interactive Brokers has created a unified prediction-market interface spanning its ForecastEx platform, Kalshi and CME Group, with orders routed toward the best available net price. Interactive Brokers plans to add more exchanges and remains focused on economically relevant events such as elections, climate and macro indicators, while expanding weather offerings into hurricane-landfall and insurance-risk contracts.
Coinbase Global is scaling even faster. Its prediction market contracts and revenues jumped 106% sequentially in the second quarter of 2026, pushing the business above $100 million in annualized revenues. Coinbase’s new crypto-binary experience drove roughly three times as many daily traders and four times the daily revenue versus May averages, while management plans to add combination trades.
HOOD’s Price Performance, Valuation & Estimate Analysis
Over the past six months, Robinhood’s shares have jumped 42.8% compared with the industry’s growth of 22.6%.
Image Source: Zacks Investment Research
HOOD shares are currently trading at a premium to the industry. The company has a 12-month trailing price-to-tangible book (P/TB) of 11.47X compared with the industry average of 3.27X.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for Robinhood’s 2026 earnings suggests a year-over-year increase of 2.9%. The trend is likely to continue next year, with earnings expected to jump 33%. In the past 30 days, earnings estimates for 2026 and 2027 have been revised higher to $2.11 and $2.81 per share, respectively.
Image Source: Zacks Investment Research
HOOD currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.