Core Insights - The CFTC has been involved in regulating prediction markets, particularly event contracts related to elections and sports, which have seen rapid growth following legal victories against prohibitions [1][2][3] - The emergence of various prediction market platforms, such as Polly Market, indicates a diversification in the types of events that can be bet on, expanding beyond elections to include sports and other performances [2][4] - Recent legal cases involving allegations of performance manipulation by athletes highlight the risks associated with prediction markets, particularly in sports betting [5][6][15] Regulation and Compliance - The CFTC has a core competency in regulating designated contract markets, but there is a learning curve as these prediction markets are relatively new [11][12] - There is a need for increased awareness and training regarding compliance and the risks of insider trading within these markets [9][10][15] - Registered prediction markets must ensure their contracts are not susceptible to manipulation and comply with regulatory obligations to avoid liability [17][18] Market Growth and Trends - Prediction markets have gained popularity and are now considered a permanent asset class, with their influence evident in various sectors, including politics and sports [19][20] - The ability of prediction markets to provide early insights into outcomes, such as election results, demonstrates their growing significance compared to traditional sources [20]

Predictions marketplace Kalshi Inc. sued New York’s gaming commission, saying the state agency is overstepping its authority by attempting to regulate sports-betting operations that fall exclusively under federal jurisdiction.In a lawsuit filed Monday in Manhattan US District Court, Kalshi said that it’s operating legally in New York under federal law. Kalshi accused state regulators of threatening the company over its so-called event contracts and asked a federal judge to immediately block the state from a ...

Core Insights - Robinhood Markets (HOOD) faces increased competition in the event-contracts business from DraftKings Inc. (DKNG), which is entering the prediction market through the acquisition of Railbird Technologies Inc. and its subsidiary Railbird Exchange, LLC [1] - DraftKings aims to leverage its acquisition to offer event prediction trading in states where sports betting is banned, targeting retail users with the upcoming "DraftKings Predictions" app [2] - Robinhood maintains a first-mover advantage with its partnership with Kalshi, offering over 100 CFTC-regulated event contracts to 12 million monthly users, nearly double DraftKings' user base [3] Competition Landscape - The competition between Robinhood and DraftKings is intensifying as both companies target young, mobile, risk-tolerant users [4] - While Robinhood offers lower fees and broader access, DraftKings may differentiate itself with an entertainment-focused, gamified approach to event-based prediction markets [4] - DraftKings' entry into the market validates prediction markets as a mainstream asset class, potentially leading to multi-billion-dollar growth across various sectors [5] Financial Performance - Interactive Brokers (IBKR) has seen rapid growth in its Forecast business, reporting record net revenues of $1.66 billion in Q3 2025, with a 27% sequential increase in tradable Forecast events [6][7] - Unlike Robinhood and DraftKings, Interactive Brokers focuses on economic, financial, government, and climate indicators, appealing to a more analytical trading demographic [8] Stock Performance and Valuation - Over the past year, Robinhood's shares have increased by 367.4%, significantly outperforming the industry average of 33.4% [9] - Currently, Robinhood's shares trade at a premium, with a price-to-tangible book (P/TB) ratio of 15.43X compared to the industry average of 2.93X [11] - The Zacks Consensus Estimate indicates year-over-year earnings growth of 64.2% for 2025 and 17% for 2026, with upward revisions in earnings estimates for both years [12]

Core Insights - Robinhood is exploring opportunities in the prediction markets space to diversify its offerings beyond retail trading [1][2] - The company is considering growth through acquisition, joint ventures, partnerships, or developing its own products [2] - Interest in prediction markets has increased significantly since the U.S. presidential election, with various venues allowing investors to wager on diverse topics [3] Company Developments - Robinhood has partnered with prediction marketplace Kalshi and Interactive Brokers Group's ForecastEx to enhance its prediction markets capabilities [2][3] - The U.S. Commodity Futures Trading Commission issued a no-action letter in September, which may positively impact the trajectory of prediction markets [4] - Intercontinental Exchange (ICE) invested $2 billion in Polymarket, positioning itself as a key player in the distribution of event-driven data [6] Market Trends - The surge in interest in prediction markets is partly attributed to regulatory changes under the Trump administration [3] - Novig, a peer-to-peer sports prediction market, raised $18 million in Series A funding to expand its market presence and features [6][7] - Fawzi Itani from Forerunner highlighted that Novig is well-positioned within key trends in gaming and entertainment, reflecting consumer engagement with financial products [7]

Core Insights - Kalshi has surpassed $1 billion in monthly contract volume, significantly driven by the NFL season, with 98% of the volume from sports-related contracts [1][2] - Prediction markets are gaining traction, particularly in sports, posing a potential threat to traditional sports betting platforms like DraftKings and FanDuel [2][6] - The competition between Kalshi and Polymarket is intensifying, with both platforms rapidly expanding their sports contract offerings [11][9] Industry Overview - Prediction markets allow users to bet on various future events, including sports outcomes, and are regulated federally by the Commodity Futures Trading Commission [3][12] - Traditional sports betting operates on a state-by-state basis, while prediction markets are federally regulated and accessible in all states, providing a larger potential customer base [17][12] Market Dynamics - DraftKings and Flutter Entertainment have seen significant stock declines, with DraftKings falling over 22% and Flutter over 17% in September, as investors react to the emerging threat from prediction markets [5][6] - Analysts predict a potential downside of 35% to 60% for DraftKings, citing underestimation of the risks posed by prediction markets [19][20] Competitive Landscape - Kalshi has partnered with Robinhood to expand its reach, while Polymarket is expected to re-enter the U.S. market after regulatory approval [8][10] - Both Kalshi and Polymarket are seen as offering better odds and user value propositions compared to traditional sports betting platforms [15][16] Future Outlook - DraftKings and FanDuel may consider entering the prediction market space to compete, but regulatory challenges and the time required to launch such platforms could hinder their efforts [22][23] - Some analysts remain optimistic about the long-term prospects of traditional sports betting companies, suggesting that the current selloff presents a buying opportunity [21][20]

Core Insights - Robinhood Markets has identified a new growth driver through its prediction markets feature, which has led to a significant increase in share price and year-to-date returns [1][3][4] Growth Potential - The platform hosted over two billion event contracts in Q3, marking a 100% growth from one billion in Q2, indicating strong traction in prediction markets [3][4] - Event contracts generated approximately $20 million in revenue for Q3, which could annualize to around $80 million, representing about 1.7% of the expected total revenue of $4.77 billion over the next 12 months [5][6] Market Disruption - Kalshi, Robinhood's partner in prediction markets, has launched new betting features that could disrupt traditional sports betting companies like DraftKings and Flutter, as evidenced by the immediate drop in their stock prices following Kalshi's announcement [2][7][8] - The American Gaming Association reported that sportsbooks generated approximately $13.7 billion in revenue in 2024, a 24% increase from 2023, highlighting the potential market size for Robinhood's event contracts [8] Long-Term Outlook - Analysts have raised their price targets for Robinhood based on the early success of its prediction markets, with an average target of $142.50, which is close to the stock's recent closing price [11][12] - Despite a high valuation and some analysts predicting downside potential, the company's ability to innovate and find new revenue streams suggests a promising long-term outlook [12]

Core Insights - Robinhood Markets, Inc.'s event-contracts business is experiencing significant growth, with September revenue projected to exceed a $200 million annualized rate due to increased volumes from partner Kalshi, particularly in NFL and NCAAF markets [1][2]. Group 1: Revenue and Growth Projections - The prediction markets (event contracts) are identified as a major growth driver for Robinhood, with Kalshi's volumes expected to reach a record $2.6 billion in September, more than double the previous monthly high [2]. - Robinhood users are estimated to account for 25%–35% of Kalshi's daily volume, with the company's event-contract revenue running at an annualized rate above $200 million for September [2][4]. - The analyst projects that if Kalshi's volume reaches 8.5 billion contracts by Q3 2025, Robinhood could generate approximately $25.5 million in revenue, indicating a quarterly run rate exceeding $100 million [5]. Group 2: User Engagement and Market Activity - During the first week of NCAAF, Robinhood users traded over 100 million contracts, representing about 34% of Kalshi's NCAAF volume for that weekend [4]. - The analyst notes that most of the trading activity is occurring on Kalshi, which shares a fee of 2 cents per contract with Robinhood [4]. Group 3: Analyst Ratings and Price Forecast - Piper Sandler analyst Patrick Moley has reiterated an Overweight rating on Robinhood, increasing the price target from $120 to $140 [1]. - The analyst has raised the FY25 EPS estimate for Robinhood to $1.87, up from a previous estimate of $1.50 [5].

NFL football is back, and so are prediction markets!Today, we’re discussing the force driving this resurgence and unpacking what it means for the future of prediction markets. 🏈👇~~ Analysis by @JackInabinet ~~The return of televised professional football in America has been a godsend for prediction markets, which had seen trading volumes slow and open interest fall off considerably from the U.S. presidential election highs.Prediction market trading volumes have doubled in the month of September, and rumors ...

Partnerships - CME announces a significant new partnership with FanDuel [1] - Partnership enables event contracts for various assets including stock prices, oil & gas, and crypto [1] Market Trends - Prediction market boom is just beginning [1] Product Offering - Event contracts available for basically anything [1] - Bet sizing starts as low as $1 [1]

Core Viewpoint - The new tax regulations under President Trump's One Big Beautiful Bill (OBBB) Act will significantly impact the professional sports betting industry in the U.S., particularly affecting how professional gamblers can deduct their losses, which may lead them to seek alternative betting avenues like Robinhood's event contracts [1][2][6]. Group 1: Impact of New Tax Regulations - The OBBB Act allows professional gamblers to deduct only 90% of their betting losses, compared to the previous 100% deduction, which will increase their taxable income and tax obligations [1][6]. - This change is expected to drive professional gamblers to explore new jurisdictions or alternative betting methods, such as event contracts [7][12]. Group 2: Robinhood's Position and Offerings - Robinhood Markets has begun offering prediction markets through a partnership with Kalshi, allowing users to bet on various outcomes without the same tax burdens as traditional sports betting [8][9]. - Event contracts are regulated under the Commodity Futures Trading Commission (CFTC), allowing full deduction of losses against gains, which is advantageous for professional bettors [10][11]. - In the first six months of offering event contracts, Robinhood reported over one billion contracts traded, contributing to a 50% year-over-year revenue growth [14]. Group 3: Financial Performance and Analyst Outlook - Robinhood's revenue reached $927 million, marking the second-highest in its history, prompting analysts to raise their price targets for the stock [15]. - Current analyst ratings suggest a Moderate Buy for Robinhood, with price targets ranging from $110 to $125 [11][15].