Robinhood Prediction Markets Entry Threatens DraftKings, FanDuel, Says Analyst
- 15 Dec 2025
- Gambling News
The brokerage company will introduce its prediction markets platform at Robinhood Presents: YES/NO, which is being held on Tuesday by Robinhood Markets (NASDAQ: HOOD).According to an observer, the occurrence might cause a stir in the sports betting sector.
"Among the revelations that could come from the Dec. 16 event is the trading house signaling to investors and customers that it's less dependent on Kalshi for event contracts," said Julie Hoover, an analyst at Bank of America who follows Robinhood, in a note to clients today.
Given that Robinhood revealed last month that it is collaborating with market maker Susquehanna International Group on what amounts to an organic prediction markets product, it is a clear, albeit unverified, possibility. The business that created the widely used trading software has insisted that it will continue to work with Kalshi.
Although the two businesses split the economics equally, Robinhood has been offering Kalshi event contracts on its trading platform. However, since the former accounts for 25% to 35% of the former's volume and prediction markets are one of Robinhood's fastest-growing market segments, it might be motivated to reduce the Kalshi relationship.
Not Always Positive News for FanDuel and DraftKings
Hoover of Bank of America notes that the sports betting industry's current mindset is that negative news for Kalshi is good for established operators, but that viewpoint might be incorrect.
"From our conversations, it seems like online sports betting investors are viewing any negative for Kalshi as a positive for OSB operators, but we think a large tech company such as HOOD investing more in the space is a competitive threat to DraftKings and FanDuel,” observes the analyst.
The two biggest US sportsbook providers, DraftKings and FanDuel, a division of Flutter Entertainment (NYSE: FLUT), are both entering the prediction markets sector. FanDuel is already available, and a DraftKings counterpart is anticipated to launch shortly.
According to Hoover, Robinhood's push for prediction markets has the potential to significantly change the sports betting environment, but the big players in the industry aren't taking the danger lightly. The financial services corporation is larger than all publicly traded gambling companies by market value, and with around $23 billion in cash on hand, it has the means to upend sports betting through its prediction market aspirations.
Pay Attention to Fees
The degree to which the business intends to compete with Kalshi and Polymarket on event contract fees is another thing to keep an eye on during the Robinhood prediction markets event. Fee compression is a major problem in the yes/no contract landscape because sportsbook operators outside of Illinois do not impose fees for each wager. Because the sector is often thought to be less promotional than sports betting, prediction exchanges' ability to maintain fees as low as feasible for customers is particularly important.
Some market watchers think prediction markets are poised to experience exponential revenue growth over the next few years, despite the potential for an event contracts fee war.
If more institutional investors join the market, operators may be able to maintain low fees as the prediction markets market expands. Because yes/no derivatives offer ways to hedge legal, macroeconomic, and regulatory risks, analysts believe that professional investors should be more involved in prediction markets.
