Key Takeaways
- • Robinhood head of futures and prediction markets JB Mackenzie, VP and GM, said bitcoin, gold and oil price volatility contracts are now among the fastest-growing products in the company's prediction markets, according to CoinDesk.
- • Mackenzie said Robinhood's largest event contract in September was tied to the Federal Reserve's interest rate decision rather than sports, signaling growing demand for financial and economic event contracts.
- • Crypto prediction contracts have shortened from weekly to daily to 15-minute settlement periods, which Mackenzie compared to zero-day options in terms of risk of rapid losses.
- • Prediction markets are drawing users into Robinhood's equities, crypto, futures, options and individual retirement account products, with prediction markets potentially becoming the fastest-growing of the company's 11 businesses generating more than $100 million in annual revenue.
Summary
Robinhood (HOOD) is seeing rising demand for prediction markets tied to bitcoin, gold and oil, as traders increasingly look beyond sports and elections to take positions on moves in financial markets, according to CoinDesk. JB Mackenzie, VP and GM for futures and prediction markets at Robinhood, said at the NEXTPredict conference in New York on Thursday that price volatility contracts on those assets are now dominating the marketplace and are the fastest-growing products in the category. Sports remains the largest product on the platform, Mackenzie said, but usage is shifting.
Prediction markets allow traders to buy contracts whose prices reflect the market's implied probability of an outcome. A bitcoin contract, for example, can ask whether the asset will trade above a set price at a specified time, letting traders express a view without owning the cryptocurrency. Robinhood entered the business through a partnership with Kalshi, a federally regulated prediction market exchange. The expansion comes as sports contracts face legal challenges from state gambling regulators, which raises questions about how much of that market will remain available.
Financial and economic contracts are emerging as an alternative growth source. Mackenzie said Robinhood's largest event contract in September was tied to the Federal Reserve's interest rate decision. Contract durations are also shortening, particularly in crypto, where some products now settle in as little as 15 minutes. Mackenzie said contracts have moved "from a week" to a day and now to 15 minutes. Asked about risk, he likened 15-minute crypto contracts to zero-day options, noting both can generate rapid losses although their structures differ.
Prediction markets also serve as an acquisition channel for Robinhood's broader brokerage business. Mackenzie said users who begin with event contracts often move quickly into stocks, cryptocurrencies, futures and options, and some discover the platform's individual retirement accounts. Robinhood has 11 businesses generating more than $100 million in annual revenue each, and Mackenzie said prediction markets could become the company's fastest-growing segment among them.
Prediction markets allow traders to buy contracts whose prices reflect the market's implied probability of an outcome. A bitcoin contract, for example, can ask whether the asset will trade above a set price at a specified time, letting traders express a view without owning the cryptocurrency. Robinhood entered the business through a partnership with Kalshi, a federally regulated prediction market exchange. The expansion comes as sports contracts face legal challenges from state gambling regulators, which raises questions about how much of that market will remain available.
Financial and economic contracts are emerging as an alternative growth source. Mackenzie said Robinhood's largest event contract in September was tied to the Federal Reserve's interest rate decision. Contract durations are also shortening, particularly in crypto, where some products now settle in as little as 15 minutes. Mackenzie said contracts have moved "from a week" to a day and now to 15 minutes. Asked about risk, he likened 15-minute crypto contracts to zero-day options, noting both can generate rapid losses although their structures differ.
Prediction markets also serve as an acquisition channel for Robinhood's broader brokerage business. Mackenzie said users who begin with event contracts often move quickly into stocks, cryptocurrencies, futures and options, and some discover the platform's individual retirement accounts. Robinhood has 11 businesses generating more than $100 million in annual revenue each, and Mackenzie said prediction markets could become the company's fastest-growing segment among them.
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