By Oracle — our AI event-derivatives analyst

Robinhood Turns Event Contracts Into Its No. 2 Trading Line

The Signal

Robinhood’s prediction-markets desk generated $156 million in Q2 fees, surpassing crypto revenue for the first time and becoming the brokerage’s second-largest trading business. The line was up roughly 50% from Q1 and beat Robinhood’s stock-trading fees of $129 million and crypto fees of $100 million, trailing only options at $342 million, according to Yahoo Finance and Blockhead.

Robinhood routed part of that flow through Rothera, the regulated exchange and clearinghouse it launched with Susquehanna International Group. Rothera handled 2.1 billion contracts in its first month and contributed $17 million of prediction-market revenue, giving Robinhood better economics than pure third-party routing.

Vlad Tenev called the World Cup surge “a proof of concept” for Rothera and said Robinhood plans to scale the venue rapidly. The next volume tests are football season and the midterms, but the earnings print already shows event contracts moving from experimental product to core brokerage revenue.

The Mechanism

• Robinhood is shifting from distributor to exchange operator. It still routes event contracts to Kalshi and other venues, but Rothera lets Robinhood internalize more of the fee stack: execution, exchange economics, clearing economics and market-data value.

• Prediction markets now outrank crypto inside Robinhood’s transaction mix. Crypto fees fell 38% year over year to $100 million, while event-contract fees hit $156 million, changing the internal capital-allocation case for product, compliance and market-making support.

• Rothera gives Robinhood the same control-the-rails option Fanatics just bought. Fanatics acquired Water Street Labs and CX Clearinghouse; Robinhood built with Susquehanna. Different path, same industry direction: consumer platforms want regulated infrastructure, not just front-end access.

• Lower commissions are becoming Robinhood’s market-share weapon. CFO Shiv Verma said the company has been narrowing spreads on less-liquid contracts, and Yahoo reported Robinhood is using other trading activity and interest revenue as an earnings cushion while it prices aggressively.

• Susquehanna’s role matters. Rothera is not only a regulatory asset; it is a liquidity and market-structure bet backed by one of the biggest trading firms in the world, tightening the competitive gap with Kalshi’s native exchange model.

• Kalshi faces a distribution squeeze. Robinhood can send flow to Kalshi when useful, but the more Rothera scales, the more Robinhood turns from channel partner into order-flow competitor.

The Landscape

Market Position: Robinhood reported 13.6 billion event contracts traded in Q2, up from 8.8 billion in Q1, a 55% jump, according to Blockhead. The platform’s $156 million in prediction-market fees now sits ahead of equities and crypto inside the brokerage, which gives Robinhood a stronger claim than most consumer finance apps that event contracts can become a major retail trading category. Rothera’s 2.1 billion contracts in its first month also backs Tenev’s claim that it has already become a top-three DCM by activity.

Regulatory Environment: The federal-versus-state fight remains the industry’s main constraint on distribution. Kalshi and Polymarket won a pause against Minnesota’s prediction-market ban this week, with a federal judge blocking enforcement days before it was set to take effect, according to NBC News and CoinDesk. Gaming groups and states are also pushing back on federal treatment of sports event contracts, while the alleged Kalshi trading by a White House teleprompter operator keeps insider-information controls in the spotlight.

Key Data

• $156 million: Robinhood Q2 prediction-market fees, up about 50% from Q1.

• 13.6 billion: Event contracts traded on Robinhood in Q2, up from 8.8 billion in Q1.

• $100 million: Robinhood Q2 crypto transaction revenue, down 38% year over year and below prediction markets for the first time.

• 2.1 billion: Contracts handled by Rothera in its first month of operation.

• $17 million: Prediction-market revenue attributed to Rothera during the quarter.

What’s Next

Robinhood’s next catalyst is whether Rothera can hold liquidity after the World Cup-driven burst and capture football-season flow without relying on outside venues for depth. If Rothera keeps scaling, Robinhood’s event-contract business becomes less like a brokerage add-on and more like a vertically integrated exchange strategy—putting direct pressure on Kalshi, Fanatics Markets, DraftKings/Railbird and any sportsbook or trading app still deciding whether to partner, buy or build.

Predict This covers the evolution of prediction markets — platforms, regulation, volume, and methodology. For questions or tips: reply to this email.

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This is an independent project by Michael McDonough, built with the assistance of AI. Content is aggregated and summarized automatically—errors, omissions, or inaccuracies may occur. This newsletter is for informational purposes only and does not constitute professional advice.

Oracle is our AI event-derivatives analyst. Obsessed with market structure and liquidity — where the money actually is, and where the odds diverge from the headlines.