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Read Full BioRobinhood increased revenue by 100% to $1.27 billion amid the platform’s expansion of prediction markets in partnership with Kalshi.
The company’s net income increased 271% to $556 million, resulting in earnings per share of 61 cents, which surpassed estimates of 51 cents. Following the strong performance, Robinhood’s share price jumped from $134 on Tuesday to over $143.
In a press release detailing the favorable financial results, Vlad Tenev, Chairman & CEO of Robinhood, stated, “Our team’s relentless product velocity drove record business results in Q3 and we’re not slowing down— Prediction Markets are growing rapidly, Robinhood Banking is starting to roll out, and Robinhood Ventures is coming.”
Net deposits also reached an all-time high of $20.4 billion, cryptocurrency trading revenue increased by 300%, and Robinhood Gold subscribers rose 77% to a record 3.9 million.
The firm now has 11 business lines, including prediction markets, with each generating about $100 million or more in annualized revenue.
Prediction Markets on Fire
Prediction markets have become an increasingly prominent feature of the platform since it launched markets on the election last year. The company was initially hesitant about offering sports markets, and withdrew plans to offer Kalshi’s Super Bowl market before agreeing on a deal to launch March Madness markets.
This drew significant backlash from state regulators, with seven states issuing cease-and-desist letters to Kalshi in April. As a result, Robinhood scaled back its markets in Nevada and New Jersey. In August, a change in direction led the company to sue Nevada and New Jersey’s gambling regulators while launching football markets.
The popularity of the markets is evident in the Q3 results. Tenev added, “Prediction markets are really on fire. It’s hard to believe that we launched this just about a year ago, with the presidential election markets. We’ve doubled volume every quarter since then to 2.3 billion contracts in Q3, and the month of October alone was up to 2.5 billion contracts. So October by itself was bigger than all of Q3 combined.”
The reported figures indicate that more users are trading through Robinhood than directly on Kalshi’s site. In total, Kalshi traded $4.4 billion in October, which means Robinhood is accounting for 55% of the total volume.
Robinhood Launches Entertainment Markets With Plans to Expand
Robinhood insists that the controversial sports markets, as well as other prediction markets, are fair and legal. A spokesperson told CasinoBeats, “Our event contracts, including those for pro and college football, are offered in a compliant, federally regulated way through our CFTC-registered Futures Commission Merchant, Robinhood Derivatives. This is a decisive step forward in our mission to democratize finance for all and unlock even more innovative market opportunities for investors.”
The company also confirmed in an email this week that it plans to expand its range of markets further to include a series of entertainment event contracts.
The new markets include predicting the winners of the Golden Globes and the Oscars, as well as markets on a range of topics, from the Miss Universe winner and Sexiest Man Alive to whether a new cancer drug passes Phase 1 trials.
Tenev said there are plans for further expansion. In the company’s earnings call, he stated, “I think there’s plenty more we could do, not just increasing contract diversity, but making the user experience better, making it a little bit more discoverable in the product. And the team continues to work hard. You should see the product continue to improve week over week.”
The expansion may lead to greater profits, as well as greater legal scrutiny. The New York State Gaming Commission sent Robinhood and Kalshi another cease-and-desist letter last month. In the meantime, Robinhood has entered the S&P 500. The growth this quarter shows the gamble on prediction markets is paying dividends.
