Robinhood (HOOD +0.97%), the online brokerage that popularized commission-free trades, generates most of its transaction revenues from options, equities, and cryptocurrencies. The volatile cryptocurrency market was a double-edged sword for Robinhood: crypto summers boosted its trading volumes among short-term traders, but crypto winters drove them away. That's what happened in the first quarter of 2026, when its crypto transaction revenue dropped 47% year over year.
To offset that pressure, Robinhood has been expanding its fintech ecosystem with more card-based banking services, AI-powered portfolio management tools, wealth management services, and tokenized assets. It's also locking more customers into its Gold subscriptions -- which offer interest-free margin, lower margin rates, higher interest rates on uninvested cash, and other perks for $5 a month or $50 per year.
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However, another potential catalyst for Robinhood is the growth of prediction markets like Kalshi and Polymarket. Let's see how this nascent market could drive Robinhood's long-term growth.
How is Robinhood participating in prediction markets?
Robinhood isn't operating a regulated prediction markets platform like Kalshi or Polymarket. Instead, it offers "event contracts" through its subsidiary, Robinhood Derivatives.
These contracts allow Robinhood's investors to bet on yes/no outcomes for future events. If the event occurs, the contract settles at $1. If it doesn't, it settles at $0. Prices between $0.01 and $0.99 reflect the probabilities of the outcome.
For example, a contract trading at $0.75 implies a 75% probability of the event occurring. If you buy the contract at $0.75 and it happens, you'll receive $1.00. That gives you a profit of $0.25 per contract before fees and spreads. If it doesn't happen, you lose your initial investment.
Robinhood is expanding that platform with additional event contracts covering sports, politics, economic data, crypto fluctuations, trending news stories, and company events. That expansion could draw more users to its app, attract larger deposits, and boost its trading spreads and fees.
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Key Data Points
Could Robinhood Derivatives become its new growth engine?
Robinhood had 27.4 million funded customers and 4.3 million Gold subscribers at the end of its latest quarter. That puts it in a strong position to challenge Kalshi, which has about 5.1 million monthly active users (according to Sensor Tower) and Polymarket, which has fewer than a million active users (according to Coindesk).
If Robinhood successfully expands this smaller business, it could become a new growth engine alongside its options, equities, and crypto trading segments. It could also give it more opportunities to cross-sell and bundle its services, helping it lock in customers. However, tighter regulations for prediction markets could still hamper those ambitious plans.
