Robinhood positioned to benefit more from prediction markets than Coinbase
Online trading platform Robinhood is expected to benefit more than cryptocurrency exchange Coinbase from the growth of prediction markets, according to a survey by Japanese investment bank Mizuho.
The bank said its research showed that Robinhood users planned to fund prediction market activity primarily with fresh capital, which the bank said could limit the extent to which the product draws revenue away from other trading activity.
Coinbase users, by contrast, were more likely to sell cryptocurrency to finance prediction market trades. Coinbase announced the launch of its prediction market earlier this week.
Equity Research Analysts at Mizuho, Dan Dolev and Alexander Jenkins, wrote, “We expect a bigger percentage revenue benefit to HOOD vs. COIN given that the survey showed that users on that platform are more inclined to fund prediction markets portfolio with fresh money.”
Mizuho surveyed more than 230 users of the two platforms and found they were around nine times more likely to participate in prediction markets than investors who did not use either app.
Economic events (81%) were the most common focus among respondents, followed by political outcomes (49%) and sports-related markets (47%).
Approximately 50% of Robinhood respondents said they expected to use new funds for prediction markets, while smaller shares pointed to selling traditional investments (12%) or crypto (10%).
Among Coinbase users, 37% said selling cryptocurrency would be their primary funding source, matching the proportion planning to add new money.
Charlotte Capewell brings her passion for storytelling and expertise in writing, researching, and the gambling industry to every article she writes. Her specialties include the US gambling industry, regulator legislation, igaming, and more.
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The Backstory
Why the prediction market rivalry matters now
Robinhood and Coinbase are racing to turn prediction markets into a mainstream feature alongside stocks and crypto. The stakes go beyond a new product line. How users fund these trades, whether regulators allow key contracts and how platforms prevent manipulation will shape who captures engagement and revenue in a crowded field. Recent moves by both companies and their competitors show how quickly the landscape is shifting and why investors are recalibrating expectations.
Coinbase set the pace with a broad expansion blueprint
Coinbase has telegraphed its intentions for months, using a product showcase to position itself as an “everything app” for on-chain finance. The company outlined plans to launch a U.S. prediction platform and roll it out internationally, alongside tokenized equities, as part of a larger exchange-for-everything strategy. In one update, Coinbase said its prediction offering would debut “in the next few months,” with tokenized stocks to follow if rules allow. That push was framed as a response to investor demand for a single venue to trade multiple asset classes and events. For context on these plans, see the company’s preview of a dual launch of prediction markets and tokenized equities expected at a Dec. 17 showcase and its roadmap to roll out a U.S. prediction platform.
Coinbase’s timing coincides with a broader reopening of the market in the United States. Rival Gemini recently secured a designated contract market license after a five-year application, a development flagged in Coinbase’s showcase preview, potentially broadening regulated venues that can list event contracts. At the same time, independent platforms are consolidating or seeking partners to reenter the U.S., as seen when Polymarket acquired QCEX to regain access, according to Coinbase’s U.S. launch article, while major sportsbooks signal interest in adjacent products.
Robinhood grabbed early traction with sports-driven markets
While Coinbase sketched an expansive strategy, Robinhood leaned into sports to test product-market fit. The brokerage launched event contracts tied to the NFL and college football, initially limited to early season slates and structured more like tradable contracts than traditional sportsbook wagers. Robinhood cast the effort as a continuation of its one-stop investing plan and a way to deepen engagement with customers already active in markets. The launch details are outlined in Robinhood’s rollout of football-linked markets.
Early results encouraged Wall Street bulls. Piper Sandler estimated the move helped drive about $200 million for Robinhood and raised its target price, citing a 50-50 revenue split with partner Kalshi and record September trading tied to NFL and NCAA activity. Analysts also pointed to seasonal upside if regulators allow sports contracts to continue. The revenue mechanics and analyst reactions are covered in a note highlighting a revenue surge from prediction markets.
The Kalshi relationship is central. As a federally regulated event-contracts exchange, Kalshi offers a listing venue Robinhood can surface to its retail base while taking a share of fees per contract. That creates a potentially capital-light expansion for Robinhood compared with building and certifying an exchange from scratch. It also allows Robinhood to test user appetite for event contracts before widening to new categories.
Funding dynamics hint at who benefits most
The crux for investors is where dollars come from. If users add fresh funds for event contracts, platforms gain incremental revenue. If they sell other holdings, the impact may be neutral or negative. Survey evidence and platform behavior suggest a divergence between the two companies’ user bases. Coinbase’s push to add prediction markets and tokenized equities aims to keep users on-platform, but its customers may be more likely to finance new bets by rotating out of crypto. Robinhood’s cohort appears more inclined to deposit new money for event trades, reducing cannibalization of existing activity. That difference, if it persists, could widen the revenue gap as both companies scale the product.
The composition of markets also matters. Economic and political contracts tend to draw a different mix of users and liquidity than sports. Coinbase has signaled interest in a broad set of categories, while Robinhood’s early traction is sports-heavy via Kalshi. Sports can drive seasonal spikes and media attention, but economics and politics may build more durable year-round volumes, especially in election and rate cycles. The winner will be the platform that balances breadth with integrity and conversions from browsing to trading.
Integrity scares and the risk of manipulation
Prediction markets face an optics problem when insiders can influence outcomes. Coinbase ran into that debate after Chief Executive Brian Armstrong turned an earnings call into a live demonstration of how “mention markets” can be gamed. By intentionally saying terms like “Bitcoin” and “Web3,” he triggered payouts on contracts tied to words spoken on the call, an episode that put market integrity under the microscope. Kalshi and Polymarket declined comment at the time, and Coinbase framed the moment as lighthearted while noting employees are barred from participation. The incident, and its regulatory implications, is summarized in a report on how an on-air joke exposed a prediction-market flaw.
The Commodity Futures Trading Commission warns exchanges not to list contracts “readily susceptible to manipulation.” Events that hinge on the choices of a single person or small group can fall into that category, raising questions about where platforms draw the line. As more mainstream companies enter the space and as volumes grow, expect tighter listing standards and surveillance. The platforms that prove they can police markets without chilling innovation will have an edge with regulators and users.
Regulatory crosscurrents will decide the ceiling
Even as volume builds, the rules remain unsettled, especially for sports. Several state regulators have attempted to block Kalshi from offering sports-linked contracts, arguing they fall under gaming laws. Kalshi has pushed back, setting up legal battles over whether these products should be treated as financial instruments or gambling. The tension is detailed in coverage of regulatory scrutiny around Kalshi’s sports contracts. Outcomes will shape product menus, marketing and who can distribute these markets at scale.
Tokenized equities add another layer of uncertainty. Coinbase has signaled that launch timing depends on regulators sketching out crypto-based trading rules. If authorized, tokenized stocks could complement event contracts by anchoring users in a broader on-chain portfolio. If delayed, Coinbase may lean harder on prediction markets and other derivatives to keep users engaged. Either way, the path runs through agencies and courts, and the timing may not match product roadmaps.
For now, the rivalry turns on execution. Coinbase is building a multi-asset, on-chain exchange with prediction markets as a pillar. Robinhood is tapping a sports-fueled entry point through a regulated partner to capture incremental deposits. Both are courting users who want to trade outcomes, not just assets. The platform that converts interest into net-new funding while steering clear of regulatory and integrity land mines is positioned to benefit most as prediction markets move into the mainstream.
