Robinhood Takes Stakes in Crypto.com and OG to Expand Prediction Markets

The useful part

Robinhood is adding Crypto.com's prediction-market contracts to its app and taking minority stakes in both Crypto.com and OG, the exchange's prediction-markets business. The companies agreed to a multiyear deal, according to The Wall Street Journal. Financial terms, including the size of Robinhood's investments, were not disclosed.

How it works

• For Robinhood, the deal adds another source of event contracts for its Prediction Markets Hub.
• Robinhood Adds Another Venue Robinhood first built its prediction-markets offering through Kalshi, the CFTC-regulated event-contract exchange.
• JB Mackenzie, Robinhood's Vice President and General Manager of Futures and Prediction Markets, told the WSJ that the agreement should allow the company to offer better pricing and a wider range of contracts.
• Event Contracts Are Already Material Robinhood's latest results show why the company is adding more prediction-market supply.
• It also gives the brokerage an economic interest in one of the companies supplying those contracts.

What to take from it

That matters because event contracts have become a meaningful revenue line for Robinhood in less than two years. The agreement comes ahead of the US football season and the midterm elections later this year, both of which are expected to bring more attention to event contracts. It has since added Rothera, a CFTC-licensed exchange and clearinghouse operated through Robinhood's joint venture with Susquehanna International Group.

Details worth keeping

Crypto.com has also spun OG out into a standalone company. The Crypto.com agreement adds another supplier.