Executives from stocks and trading platform Robinhood said on Wednesday that sports contracts made up a significant proportion of the company’s approximately $1 billion worth of prediction markets trading last quarter.
In the first full quarter since Robinhood struck a deal with Commodity Futures Trading Commission (CFTC)-approved designated contract market (DCM) Kalshi, the platform took approximately one billion in prediction market contract volume, said CEO Vlad Tenev on a Q2 earnings call on July 30. That figure, which the company equates to $1 billion in dollar value, was around double the volume it took in the first quarter of this year.
In comparison, Q2 trading volumes for futures and for index options were 11 million and 17 million, respectively.
“A large percentage of the transactions in prediction markets are with sports, and we love to see our customers engage in that way as well,” said Chief Financial Officer Jason Warnick on Wednesday.
“A good chunk of it is sports,” added Tenev. “We’ve also been focused on that because that’s an area where not a lot of our competitors are present. So, we see that as a big opportunity and we’ve been investing.”
Both executives added that Robinhood is intent on broadening and expanding the range and number of prediction market contracts it offers its customers, from more sports to economic markets, the latter of which Warnick said accounted for around 100 million of the one billion volume.
“We can tell by the engagement by customers that it’s a product that is resonating,” noted Warnick of the overall category.
Sports momentum means Robinhood are merry men
Robinhood has only been offering sports contract trading for a few months. It initially intended to begin sports trading in time for the Super Bowl but announced days before the big game that it had received a formal request from the CFTC not to offer the contracts.
Just a few weeks later, on March 17, the firm unveiled a new prediction markets hub in partnership with Kalshi that allowed its customers across the U.S. to trade on a range of Kalshi-supplied contracts. By March 25, more than $200 million in volume had been traded on March Madness alone.
At the time of that announcement, Robinhood teased that it would roll out a more comprehensive event contracts platform later this year.
Six weeks later, at a Q1 earnings call on April 30, Tenev said that sports prediction markets accounted for nearly half of the one billion total contracts traded on its platform, despite the fact those options weren’t live for the full quarter.
Is sports event contract trading the same as sports betting? (Y/N)
Robinhood’s latest update on its sports activity comes amid continued scrutiny on and debate about whether sports contract trading equates to sports betting.
In one case in California, Robinhood and Kalshi are being sued by a trio of tribes. “While masquerading as novel commodities and futures products, these event contracts are, substantively, nothing more than illegal, unregulated wagers on the outcomes of sporting events,” the complaint asserted.
That broadly similar argument has been used in multiple other court cases in other states, as well as by gambling regulators and other parties across the U.S.
Robinhood states in an FAQ answer on its website that it is authorized to offer event contracts, including on sports, through Robinhood Derivatives and its membership with partnered exchanges regulated by the CFTC.
“Robinhood event contracts allow for speculation in prediction markets — these are not bets,” insists the company.
