SKN | Robinhood’s Prediction Markets Surge 136% as Crypto Trading Falls, Testing Its Revenue Diversification Strategy

Key Points:

• Robinhood customers traded 5.9 billion event contracts in October 2026, an increase of 136% from 2.5 billion a year earlier, highlighting rapid growth in prediction markets.
• Cryptocurrency activity weakened across the platform, with crypto notional volume falling 48% year over year to $17 billion, while app crypto volume declined 51% and Bitstamp exchange volume fell 45%.
• Net deposits reached $15.1 billion, but approximately $6 billion came from the Dell family’s contribution to Trump Accounts, making the underlying deposit performance less substantial than the headline figure suggests.

Robinhood Markets is seeing a significant divergence between two of its important growth areas: prediction markets are expanding rapidly while cryptocurrency trading is experiencing a sharp contraction. The company’s October 2026 operating data, released November 12, showed that customers traded 5.9 billion event contracts, up 136% from the previous year. Over the same period, crypto notional volume declined 48% to $17 billion. The figures highlight the importance of diversification as Robinhood seeks to reduce its exposure to fluctuations in digital-asset activity.

Prediction Markets Gain Momentum as Crypto Trading Weakens

Robinhood’s event-contract business recorded another month of strong growth. October’s 5.9 billion contracts exceeded September’s 5.6 billion, while average daily volume reached approximately 190 million contracts, representing a 135% year-over-year increase. These contracts allow customers to take positions on binary outcomes, including sporting events and economic developments.

Cryptocurrency activity moved in the opposite direction. Total crypto notional volume declined to $17 billion from $32.5 billion a year earlier and was 21% lower than September’s $21.4 billion. Robinhood’s app crypto volume fell 51% to $6.8 billion, Bitstamp exchange volume decreased 45% to $10.2 billion, and daily crypto trades declined 36% to 700,000.

Because both the retail platform and Bitstamp experienced declines, the weakness appears broader than a slowdown isolated to one trading channel.

Revenue Diversification Has Yet to Prove Its Full Potential

Robinhood’s expanding prediction-market operations could provide an additional source of revenue during periods of weaker cryptocurrency activity. Management said during its October 27 earnings call that Rothera, its prediction-market exchange, had reached at least $100 million in annualized revenue during its first full quarter.

However, the company did not disclose October revenue separately for prediction markets. Consequently, the latest operating data cannot establish how much the growth in event contracts has offset declining crypto-related income.

The difference in scale remains important. Robinhood’s crypto revenue declined from $268 million in the third quarter of 2025 to $100 million in the second quarter of 2026. Prediction markets would need to sustain substantial growth over several quarters to compensate for a decline of that magnitude. Moreover, annualized revenue is not equivalent to revenue already recognized during a reporting period.

Deposits and Customer Growth Provide Additional Support

Other operating indicators showed continued customer engagement. Net deposits reached $15.1 billion in October, compared with $6.1 billion in September. However, management attributed approximately $6 billion of October’s deposits to the Dell family’s gift supporting Trump Accounts, meaning the headline figure does not represent the underlying pace of ordinary customer funding.

Funded customers increased to 28.9 million, approximately 130,000 more than in September and 1.8 million higher than a year earlier. Platform assets reached $383.2 billion, down from September but 12% above the previous year.

Margin balances also increased 39% to $22.9 billion, potentially supporting interest income but increasing exposure to customer borrowing and market downturns. Meanwhile, securities-lending revenue declined 43% to $34 million.

Concentration and Regulatory Risks Remain

Robinhood’s prediction-market expansion carries its own structural risks. The company remains Kalshi’s largest distribution partner, creating reliance on an external exchange for a substantial portion of its event-contract activity. Its Rothera venture with Susquehanna, which acquired 90% of the MIAXdx exchange, provides an alternative infrastructure strategy.

Regulatory scrutiny is another consideration, particularly for sports-related contracts. Non-sports activity accounted for approximately 30% of prediction-market volume in the third quarter, compared with 15% previously, suggesting a broader range of customer interests.

The next test for Robinhood is whether prediction markets can sustain their expansion while cryptocurrency activity remains subdued. Investors should monitor November contract volumes, crypto trading activity, deposit quality and the contribution of newer businesses to reported revenue. The diversification strategy is gaining traction, but durable earnings growth will depend on converting increased activity into measurable and recurring financial results.