Reuters: Robinhood Explores Acquisitions to Expand Prediction Market Presence
Robinhood Markets is actively considering potential acquisitions to boost its footprint in the rapidly growing prediction markets sector. A top company executive confirmed to Reuters on Monday that the trading platform is looking for suitable opportunities to buy into the niche. The move comes as interest in this asset class surges globally.
Balancing Build Versus Buy Strategy
JB Mackenzie, Vice President and General Manager of Futures and International at Robinhood, stated the firm is reviewing potential acquisition targets.
He noted the company’s strong internal engineering talent for product development, indicating a balanced approach. Mackenzie said the team would “try to balance the two,” meaning they will weigh building their own products against buying existing platforms.
Beyond a full acquisition, Robinhood will also explore other growth paths, such as joint ventures or simple partnerships.
Event Contracts and Sector Growth
The prediction market sector has seen sharp growth recently, fueled partly by events like the last U.S. presidential election. This segment lets investors place wagers on diverse real-world outcomes. These outcomes range from monetary policy decisions to the results of major sports tournaments.
These wagers operate through event contracts. Each contract is structured to represent a specific binary outcome. If the event occurs, the contract pays out. If it does not, the contract expires with no value.
The sector’s expansion has attracted new entrants like Underdog, which began offering event contracts in September. Competition is heating up; for example, Intercontinental Exchange (ICE), owner of the NYSE, recently purchased a $2 billion stake in Polymarket
Robinhood’s Current Market Position
Robinhood is already operating in the prediction space through key alliances. The platform launched its event contract hub in March in partnership with prediction marketplace Kalshi.
Kalshi was valued at $5 billion in its last funding round.Robinhood also works with ForecastEx, a product from Interactive Brokers Group.
Quoted by the Reuters, brokerage firm Piper Sandler estimates Robinhood’s event contract offering is generating over $200 million in annualized revenues as of September.
Analysts from Piper Sandler calculated that Robinhood users account for about 25% to 35%of Kalshi’s daily trading volume. Robinhood is working to evolve beyond its roots as a retail trading app into a complete financial services firm. This strategic push is reflected in its stock performance, with shares climbing 273% this year, lifting its market value above $123 billion.
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