Robinhood open to deals to grow prediction markets business, exec says

By Manya Saini and Niket Nishant (Reuters) -Trading platform Robinhood Markets is open to potential acquisitions in the fast-growing prediction markets space, a top executive told Reuters in an interview on Monday, as interest in the once-niche asset class surges globally. "We as a firm are going to be looking to see if there is an acquisition that's available," said JB Mackenzie, vice president and general manager of futures and international at Robinhood. "That being said, what we also know is we have really good engineers that build great products here. So what we're going to do is try to balance the two." Prediction markets saw a surge in popularity during last year's U.S. presidential election and have since evolved into an asset class that lets investors wager on everything from monetary policy to major sports tournaments. Those wagers are placed through event contracts. Each contract represents a specific outcome that pays out if it occurs or expires worthless if it does not. The sector's growth has also drawn startups such as Underdog, which launched event contracts in September, allowing customers to profit from their views on sporting leagues. NYSE-owner Intercontinental Exchange took a $2 billion stake in Polymarket last week, underscoring the heating competition in the space. Robinhood launched its hub for trading event contracts in March, in partnership with prediction marketplace Kalshi, which was valued at $5 billion in its last funding round. It has also partnered with Interactive Brokers Group's ForecastEx. Brokerage Piper Sandler estimated that revenues from Robinhood's event contract offering were annualizing at over $200 million in September. "We estimate that Robinhood users account for about 25%-35% of Kalshi volumes on any given day," it added. Robinhood will also consider other avenues for growth, including a joint venture or a partnership instead of an outright acquisition, Mackenzie said. The company's shares have climbed 273% so far this year, through the previous close, lifting its market value to more than $123 billion and earning it a spot in the benchmark S&P 500 index. The company has rapidly broadened its offerings and diversified its customer base in a bid to evolve from a retail trading platform into a full-fledged financial services firm. (Reporting by Manya Saini and Niket Nishant in Bengaluru; Editing by Alan Barona)

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