Prediction markets have become Robinhood's fastest-growing business, generating $156 million in revenue during the second quarter of 2026 and growing more than tenfold from a year earlier. This surge in event contracts, which allow users to trade on the outcomes of future events like elections and sports, is helping the online brokerage beat Wall Street expectations despite a significant decline in traditional cryptocurrency trading.

Robinhood reported record quarterly revenue of $1.31 billion and earnings per share of $0.62, surpassing analyst forecasts of $1.28 billion in revenue and $0.43 in earnings per share. However, the company's crypto revenue dropped 38 percent from a year earlier to $100 million, tracking the decline in cryptocurrency prices. Crypto notional trading volume on Robinhood's app fell 35 percent year-over-year to $18 billion, while its Bitstamp exchange handled $22 billion in volume.

The contrast between these two business lines reveals a fundamental shift in how retail investors are engaging with financial markets. While traditional crypto trading has cooled, prediction markets, which were popularized by crypto-native platforms such as Polymarket before expanding into regulated finance, are attracting unprecedented interest. During the second quarter, Robinhood recorded 13.6 billion event contracts, supported by routing through Rothera, its prediction market exchange and clearinghouse jointly owned with Susquehanna International Group and regulated by the Commodity Futures Trading Commission (CFTC).

Why Are Prediction Markets Growing So Rapidly?

Prediction markets first entered mainstream consciousness during the 2024 US presidential election, when Polymarket handled around $3.2 billion in wagers on the Trump-Harris race alone. Since then, the combined monthly trading volume on Polymarket and its regulated rival Kalshi has climbed from less than $5 billion in September 2025 to about $24 billion in April 2026, according to Pew Research. The trend accelerated during the 2026 FIFA World Cup, when Kalshi recorded a record $5.1 billion in trading volume in the tournament's opening week as sports prediction markets attracted more users.

The appeal of prediction markets extends beyond major sporting events and political races. Korean investors have demonstrated significant appetite for these platforms, wagering a cumulative 630 billion won (approximately $485 million) on overseas prediction market platforms from August 2023 to July 2026. Of this total, transactions related to Korean political and social events accounted for about 74.5 billion won, or 12 percent of the total.

Korean investors showed particularly strong interest in domestic political events. The 2025 21st presidential election market drew about 24.3 billion won in trading from Korean investors, far exceeding the amount they traded on the 2024 US presidential election (about 17 billion won). Markets predicting the timing of former President Yoon Suk-yeol's departure saw about 21.7 billion won in trading. During periods of heightened political uncertainty from March to June 2025, when the impeachment trial and presidential election took place, Korea-related events accounted for 46 to 57 percent of Korean investors' monthly trading volume.

How Prediction Markets Work and Why They Appeal to Global Investors

• Contract Structure: Users trade "YES" or "NO" contracts on future events. For example, if a YES contract on a candidate's election is priced at $0.35, buying 100 shares costs $35. If the prediction is correct, the investor receives $1 per share for a total of $100, yielding a $65 profit. If wrong, the entire $35 investment is lost.
• Accessibility for International Participants: Korean investors can purchase USD Coin (USDC), a stablecoin pegged to the US dollar, on domestic cryptocurrency exchanges like Upbit and Bithumb, then transfer it to a personal wallet. After connecting their wallet to Polymarket, they can participate without needing a separate bank account or card.
• Real-Time Price Discovery: Contract prices change in real time according to investor trading activity, effectively showing how likely the market considers an event to occur. This dynamic pricing mechanism attracts traders seeking to profit from their forecasting ability.
• Diverse Event Coverage: Beyond politics and sports, prediction markets now cover international conflicts, central bank decisions, cryptocurrency project launches, and other major events, allowing investors to diversify their bets across multiple domains.

The accessibility of these platforms has created a global phenomenon. Korean investors continued using prediction markets even after domestic political events concluded. From December 2025 to March 2026, when the share of Korea-related market trading fell below 1 percent, monthly trading volume remained at the level of 31 million to 33 million USDC. Investment targets expanded to global issues such as the conflict between the US and Iran, the Russia-Ukraine war, the selection of the US Federal Reserve chair, and cryptocurrency project launches.

Robinhood's diversification into prediction markets reflects a broader institutional shift. The company now operates 13 businesses that each generate more than $100 million in annualized revenue, making it less dependent on crypto market cycles. On July 1, Robinhood launched Robinhood Chain, a blockchain network designed for tokenized assets that has already accumulated $344 million in total value locked. The same day, the company announced the launch of tokenized US stocks through Robinhood Wallet, enabling round-the-clock trading of digital equities in more than 120 countries, and introduced Robinhood Earn, its first decentralized lending product.

"Our product velocity continues to deliver new products for customers and drive a more diversified business," said Shiv Verma, Robinhood's Chief Financial Officer.

Shiv Verma, Chief Financial Officer at Robinhood Markets

What Regulatory and Policy Challenges Lie Ahead?

Despite the rapid growth of prediction markets, regulatory frameworks remain underdeveloped in many jurisdictions. In South Korea, although the use of overseas prediction markets is growing rapidly, related domestic systems have not yet been established. Industry analysts argue that policymakers should focus on creating institutional frameworks that can channel this demand domestically rather than simply blocking access to overseas platforms.

"Policy should move in the direction of establishing an institutional foundation that can connect demand heading overseas to domestic revenue, tax revenue, and employment, rather than remaining focused on blocking risks," noted Jo Yoon-sung, a senior researcher at Tiger Research.

Jo Yoon-sung, Senior Researcher at Tiger Research

The regulatory landscape is evolving. Robinhood's use of Rothera, a CFTC-regulated exchange and clearinghouse, demonstrates how prediction markets are being integrated into the traditional regulated finance infrastructure. This development suggests that prediction markets are transitioning from a crypto-native phenomenon to a mainstream financial product subject to established regulatory oversight.

As prediction markets continue to expand beyond politics into sports and other popular events, they are reshaping how retail investors engage with forecasting and risk management. Robinhood's earnings results underscore that this shift is not a temporary trend but a fundamental change in how financial markets are structured and accessed globally.