Robinhood Is Making Big Strides Into Prediction Markets. Here's How Increased Sports Betting Could Affect the Stock in 2026.

Core Insights - Prediction markets are positioned as a significant growth opportunity for Robinhood, following its success in crypto and stock trading, which allowed it to outperform the S&P 500 in 2025 [1][2] Group 1: Prediction Markets and Growth Potential - Robinhood launched prediction markets in October 2024, initially for the U.S. election, and has since expanded to include sports and general YES/NO events [2] - The prediction market model differs from traditional sports betting, as it involves peer-to-peer predictions rather than betting against a sportsbook [3] - The influx of capital into prediction markets is expected to drive Robinhood's growth in 2026, with CEO Vlad Tenev noting rapid growth in this segment heading into Q4 [5] Group 2: Customer Engagement and Market Dynamics - The prediction market feature is anticipated to attract new customers, particularly during the football season, with potential for cross-selling into stocks, options, and crypto [6] - Robinhood's unique position as an all-in-one investing platform allows users to engage in stocks, options, crypto, and prediction markets, setting it apart from competitors [7] Group 3: Performance Metrics - Since the introduction of prediction market contracts for football in August 2025, the number of events traded surged to 2.3 billion in Q3 [8] - In October 2025, Robinhood processed 2.5 billion prediction market contract trades, indicating a threefold sequential growth compared to Q3 [9] - The brokerage firm reported a doubling of revenue year over year in Q3, with expectations for continued growth in 2026 driven by prediction markets and increasing demand for sports betting [10]