Robinhood and Coinbase Are Already Monetizing Prediction Markets — While Regulators Debate What They Are

Billions of dollars in contracts have already traded on Robinhood's prediction market platform, making it a major revenue contributor just after launch. The company's new prediction market hub, introduced around the 2024 U.S. election cycle, leverages the same fee-based model that drives its stock and crypto trading businesses. Robinhood isn’t alone — Coinbase is integrating prediction market features powered by Kalshi’s technology, offering contracts on crypto, economics, and global events. Like Robinhood, Coinbase taps into a user base already familiar with trading assets based on price signals. These aren’t bets on random outcomes. Users trade prediction contracts they believe are underpriced or overpriced, adjusting positions as new information emerges — a process that produces continuously updated forecasts. That mechanism mirrors equity markets more than sportsbooks. Cantor Fitzgerald sees this as a structural advantage for platforms with existing infrastructure and scale. The firm expects Robinhood and Coinbase to capture significant market share as the sector grows. Yet a key question remains unresolved: are these markets derivatives or gambling? The regulatory environment is 'messy,' with no clear classification, which limits institutional participation. Hedging and risk management applications exist, but clarity is needed before those uses expand. For now, the absence of rules hasn’t stopped growth — it’s just concentrated gains in the hands of platforms that can operate in the gray.