Robinhood Markets is rapidly scaling its prediction markets business, generating $156 million in event contract revenue during the second quarter. This figure represents a dramatic climb from $13 million in the entire first half of 2025, positioning event contracts as the company’s second-largest transaction-revenue stream behind options trading.
Event Contracts Drive Transaction Growth
Event contracts allow customers to buy prediction contracts in penny increments up to $1 that pay out $1 if the prediction is correct and nothing otherwise. Robinhood reported that these contracts produced $156 million on a record 13.6 billion contracts traded in the second quarter, according to the company’s quarterly filings. That output represents about 20 cents of every transaction-revenue dollar Robinhood collects, compared to just 2 cents a year prior.
Total transaction-based revenues reached $776 million in the second quarter, a 44% increase from the prior year. Event contracts contributed more to that growth than options and equities combined. Equities brought in $129 million, crypto generated $100 million, and options led the categories at $342 million.
Volume and Regulatory Headwinds
Customer demand remains high despite month-to-month fluctuations tied to the calendar of sports seasons, elections, and economic events. Robinhood users traded about 152 million event contracts a day in August, totaling 4.7 billion contracts for the month. Although August volume fell 23% from July, the continued pace highlights sustained retail interest in the offering.
To support this expansion, a joint venture formed by Robinhood and trading firm Susquehanna International Group purchased 90% of MIAX Derivatives Exchange in January. The purchase of the federally regulated derivatives exchange and clearinghouse accelerates Robinhood’s investment in prediction markets.
At the same time, regulations remain unsettled. Plaintiffs across six states have filed lawsuits to recover money lost on the contracts under state gambling-loss statutes. Native American tribes have also initiated legal challenges concerning sports contracts, and Massachusetts securities regulators are examining the offerings, according to Robinhood’s quarterly filings.
On September 16, Missouri’s attorney general ordered Robinhood and five other operators to halt sports event contracts in the state without a state gaming license. In the federal court system, an appeals court cleared Nevada in late August to apply its gambling laws to sports-event contracts. Another ruling on September 16 found that two tribes were likely to win claims asserting that contracts on their lands violate federal Indian gaming law. Robinhood’s corporate disclosures warn that federal or state law changes could directly restrict or eliminate its ability to offer event contracts.
Financial Performance and Valuation
Despite regulatory challenges, companywide revenue reached a record $1.31 billion in the second quarter, representing a 32% increase year over year. Net income climbed 48% year over year to $573 million, bolstered by $129 million in one-time gains. Event contracts outperformed crypto trading by roughly 50% during the quarter, expanding while crypto revenue contracted by 38% to $100 million.
Market valuation reflects these changing revenue streams. Trading at about $121 per share, Robinhood stock trades at roughly 42 times expected 2027 earnings, a valuation that assumes continued growth in prediction markets and broader transaction lines.
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