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Robinhood Markets Inc.(NASDAQ:HOOD) is expanding its prediction markets business through a multiyear deal with Crypto.com
Robinhood will add contracts from Crypto.com’s prediction-markets platform, OG, to its app and take minority stakes in both Crypto.com and OG.
The Journal reported Tuesday that the move comes as Robinhood builds out a prediction-markets network that already includes Kalshi and Rothera, an independently managed exchange venture with Susquehanna International Group.
Why Robinhood Wants Another Venue
JB Mackenzie, who runs Robinhood’s futures and prediction markets business, told the Journal the Crypto.com deal would allow the brokerage to offer better pricing and a wider range of contracts, while giving Robinhood more “skin in the game.”
Crypto.com CEO Kris Marszalek told the Journal that OG has grown about 20-fold this year. He said bringing its contracts onto Robinhood could draw more retail and institutional trading to the platform, with institutions particularly interested in trading against retail flow.
Robinhood gets anothers retail customer base
Prediction Markets Are Already Big Business
Robinhood reported $156 million in event contract revenue in the second quarter, up more than 10-fold year over year and above the $129 million it made from equities and $100 million from crypto.
Robinhood customers traded 6.1 billion event contracts in July, roughly 20 times the year-earlier level.
Rothera went live in June as Robinhood expanded further into the business, while the Crypto.com agreement gives it minority stakes in Crypto.com and OG. The companies were valued at $15 billion and $5 billion, respectively, after Citadel Securities invested in both in July.
That also gives Robinhood exposure beyond the contracts it distributes on its own app. Marszalek told the Journal that Crypto.com is preparing for an IPO, though no timing has been set, while the two companies have also discussed equity-linked perpetual futures if regulators approve them.
Morgan Stanley upgraded Robinhood to Overweight last week and raised its price target to $150, citing prediction-market engagement among its growth drivers.
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Source: www.benzinga.com