NextFin News - Robinhood Markets has struck a multiyear deal to add Crypto.com's yes-or-no event contracts to its trading app and take minority equity stakes in both the digital-currency exchange and its newly independent prediction-markets platform, OG.com, a move that turns the brokerage into an aggregator of regulated venues rather than a captive customer of any single one. The stakes are priced in line with Citadel Securities' recent investment in Crypto.com, valuing the group at $20 billion and the spun-off OG.com at $5 billion. Shares of Robinhood climbed 0.8% in early New York trading on Tuesday, a muted reaction to a deal that reshapes who captures value in the fastest-growing corner of U.S. retail trading.
Starting Sept. 8, Robinhood will route a portion of its football prediction contracts to OG.com's exchange and clearinghouse, which is regulated by the U.S. Commodity Futures Trading Commission, adding a fourth venue alongside Kalshi, ForecastEx and Rothera, the derivatives exchange Robinhood launched with Susquehanna International Group. The timing is deliberate: the U.S. professional football season is underway and the November midterm elections are approaching, two of the biggest event cycles in the prediction-markets calendar. Robinhood is also expanding its election hub for state and federal races, some of which could later be routed to Crypto.com and OG.com.
The deal lands on a business that has stopped being a side experiment. Event contracts generated a record $156 million in second-quarter revenue, up more than 10-fold from a year earlier, with contracts traded rising more than 10-fold to a record 13.6 billion. Prediction markets have become a bigger revenue line than Robinhood's cryptocurrency business, which produced $100 million in the quarter, and a meaningful contributor to record total net revenue of $1.31 billion, up 32% year over year. Net income rose 48% to $573 million, and funded customers grew 7% to 28.4 million. What began as a regulatory-arbitrage curiosity is now a growth engine with a revenue line large enough to matter to a company with a market capitalization near $96 billion.
The Deal: Distribution Beats Venue Ownership
The structure of the agreement matters more than the headline. Robinhood is not building another exchange; it is becoming the storefront. By routing contracts to multiple CFTC-regulated venues and taking equity in one of them, Robinhood captures the customer relationship, the order flow and the data, while the venues compete to provide the cheapest, deepest liquidity. That is the same playbook that made Robinhood dominant in equity trading: zero-commission execution, best-execution routing and payment for order flow, with the brokerage keeping the spread between what the market pays for flow and what it costs to route it.
For Crypto.com, the deal is a distribution lifeline. OG.com was spun out of Crypto.com as an independent trading platform with a CFTC-regulated exchange and clearinghouse, but a regulated venue without retail flow is an expensive license. Kris Marszalek, Crypto.com's chief executive, framed the partnership as the start of a broader relationship.
We think this is the beginning of a very strategic relationship, and the prediction-market event contracts are just the first product we're going to be launching together.
The two companies have also discussed equity-linked perpetual futures, pending regulatory approval, he added. Crypto.com is working toward an initial public offering, though Marszalek said no decision on timing has been made, and the company plans acquisitions to fuel growth. For a company angling for a public listing, a distribution pact with a broker that serves 28.4 million funded customers is the kind of revenue visibility that underwrites a valuation.
For Robinhood, the equity stakes align incentives without the capital intensity of building infrastructure. JB Mackenzie, Robinhood's vice president and general manager of futures and prediction markets, said the arrangement would enable more competitive pricing and a broader range of contracts.
Routing event contracts to multiple venues helps create a stronger, more diverse and resilient marketplace. It's something our customers want to trade.
There is an obvious tension in the arrangement: Robinhood's largest and most established prediction-markets partner is Kalshi, the dominant U.S. platform. Adding OG.com as a routing destination gives Robinhood leverage over Kalshi on pricing and market selection, but it also dilutes the exclusivity that likely underpinned the original partnership. Kalshi's CEO, Tarek Mansour, has said his main rivals are CME Group, Robinhood and sportsbook operators rather than Polymarket — an acknowledgment that the distribution layer, not the crypto-native venue, is where the competitive pressure is building.
Why This Is Structural, Not Cyclical
The football season and the midterms will produce a cyclical surge in volume — that part is temporary and mean-reverting. But the underlying shift is structural and will not reverse on its own: prediction markets are being reclassified from a niche gambling-adjacent product into a mainstream financial-services category, and the winner in that reclassification is the firm that owns the customer, not the firm that owns the matching engine.
Three pieces of evidence support the structural read. First, regulation has created a durable moat for CFTC-regulated venues and the brokers that can access them. OG.com operates a federally regulated exchange and clearinghouse; Kalshi is CFTC-regulated; ForecastEx is a designated contract market. The regulatory perimeter keeps offshore and crypto-native competitors at arm's length from U.S. retail, and it forces every serious player to partner with a regulated venue rather than build around one. That perimeter is being tested in court: Coinbase has filed federal lawsuits in Connecticut, Michigan and Illinois challenging state attempts to block prediction markets, after Connecticut issued cease-and-desist orders classifying sports-related markets as illegal gambling. The outcome will determine whether event contracts trade under federal derivatives law or fragment into 50 state gambling regimes — a binary that will decide how much of the 2026 surge is repeatable.
Second, the economics have crossed a threshold. At $156 million of quarterly revenue and 13.6 billion contracts traded, event contracts are no longer a loss-leading acquisition tool. They are a revenue line with operating leverage: the marginal cost of routing one more contract through an existing venue is close to zero, while the customer-acquisition value of a trader who comes for football contracts and stays for options, crypto and equities is substantial. That is why Robinhood can afford to take equity stakes rather than demand revenue share — the lifetime value of the user exceeds the take rate on any single contract. The mix shift is visible in the numbers: event-contract revenue of $156 million exceeded equities revenue of $129 million in the second quarter, a reversal that would have been unthinkable for a brokerage whose brand was built on commission-free stock trading.
Third, the competitive field is consolidating around a small number of distribution gates. Kalshi and Polymarket combined handled $50 billion in volume last year and more than $130 billion in 2026 alone, but that volume is increasingly intermediated by brokers. Kalshi holds roughly $1 billion of the industry's $1.6 billion in open interest and lists about 97% of active markets, yet its CEO names Robinhood — a customer — as a bigger threat than Polymarket. That is the signature of a market where the venue is becoming commoditized plumbing and the broker is capturing the margin. Meta CEO Mark Zuckerberg has directed a team to build a competing prediction-markets app, and sportsbook operators FanDuel and DraftKings have entered the space, but each of them faces the same question: build a venue or rent distribution from a broker.
The counter-thesis is that prediction markets are a fad whose volume is tied to the political and sports calendar, and that the current surge will revert once the midterms pass. There is real evidence for this view: event-contract activity spiked around the 2024 U.S. presidential election and the 2026 FIFA World Cup, and a meaningful share of prediction-market users are recreational rather than institutional. If the midterms disappoint on engagement, Robinhood's new venue relationships could look like expensive optionality on a seasonal product. The regulatory overhang adds weight to this view: if courts side with the states, the sports contracts that drove the 2026 surge could be restricted in key jurisdictions.
That counter-thesis is plausible for volume, but it misses the strategic point. Robinhood is not betting that every user will trade event contracts forever; it is betting that event contracts are a low-cost acquisition channel for users who will then trade higher-margin products. Even if football volume reverts after the season, the users acquired during the season do not have to. The structural shift is in the acquisition model, not in the persistence of any single event cycle.
The Second-Order Effect: Venues Become Utilities
The first-order reading of the deal is that Robinhood gets more contracts and Crypto.com gets more flow. The second-order effect is more consequential: it accelerates the commoditization of the venues themselves. When a broker can route to four regulated exchanges and take equity in one of them, no single venue can charge a monopoly take rate. Pricing power migrates from the exchange to the distributor, exactly as it did in U.S. equities after Regulation NMS fragmented trading across dozens of venues and payment-for-order-flow arrangements let brokers monetize routing decisions. The venue that once looked like a tollbooth becomes a utility, and the utility's shareholders wonder where the franchise value went.
Kalshi is the clearest exposed party. It has raised more than $2.5 billion at valuations that climbed from $5 billion to $11 billion to $22 billion, with reports of a new round near $40 billion. Those multiples price Kalshi as a franchise, not a utility. If Robinhood and other brokers successfully arbitrage across venues, Kalshi's take rate compresses even as its volume grows — a classic "good growth, bad economics" outcome. The company's own CEO has effectively conceded the point by identifying brokers, not rival venues, as the primary competitive threat.
There is also a third-order expectation gap worth naming. The market has priced Robinhood's prediction-markets success as a revenue story — $156 million in a quarter, growing 10-fold. The underappreciated story is a valuation-arbitrage story. Robinhood is taking minority stakes in Crypto.com and OG.com at a $20 billion and $5 billion valuation, respectively, in a sector where Kalshi is trading hands at $22 billion to $40 billion. If prediction-market valuations continue to re-rate upward, Robinhood's equity stakes could appreciate faster than the revenue they generate — a hidden call option on the sector embedded in a brokerage stock that the market is still valuing largely as a retail-trading platform.
The analyst community has begun to reprice that option. Goldman Sachs raised its price target on Robinhood to $142 from $124 and reiterated a Buy rating, while Jefferies lifted its target to $140 from $127 after meeting with the company's finance chief. The upgrades reflect a view that prediction markets are not a niche product but a new revenue pillar that deserves a higher multiple than order-flow-dependent brokerage revenue.
What to Watch
The deal's success turns on three observable signals over the next two quarters. First, football-contract volume routed to OG.com relative to Kalshi — if OG.com captures meaningful share without degrading fill quality, the multi-venue model works. Second, user retention after the midterms: if event-contract traders convert to options or equity traders, the acquisition thesis is confirmed; if they churn, the seasonal-fad counter-thesis gains ground. Third, the IPO path: Crypto.com is working toward a public listing with no timing decision made, and Marszalek has said the company plans acquisitions to fuel growth. A Crypto.com IPO would crystallize the $20 billion valuation and give Robinhood a marked-to-market gain on its stake.
The falsifying signal for the structural thesis is specific: if, after the November midterms, Robinhood's event-contract revenue falls back below $100 million per quarter — the level of its cryptocurrency business in the second quarter — and user conversion into non-event products does not improve, then the category is cyclical after all, and the multi-venue strategy is an expensive way to chase a seasonal spike. A second falsifying signal is legal: if state courts uphold the cease-and-desist actions and classify sports event contracts as gambling rather than derivatives, the football-driven volume that anchors the near-term thesis would be at risk in the states that matter most.
For now, the direction of travel is clear. Prediction markets are being absorbed into mainstream brokerage infrastructure, and the firms that own the customer relationship will capture more of the value than the firms that own the exchanges. Robinhood has just added another venue to its routing table and another equity stake to its balance sheet. The venues are competing to be utilities; Robinhood is positioning itself to be the gatekeeper.
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