Coinbase and Robinhood are poised to become the primary public-market winners from the rapid expansion of prediction markets, according to a new report from Cantor Fitzgerald.
The report argues that while private platforms like Kalshi and Polymarket currently lead the space, listed companies are already integrating event-based trading into their existing apps to capture market share.
Prediction markets allow users to purchase contracts tied to specific real-world outcomes, such as election results or economic data. Prices for these contracts fluctuate based on the crowd's perceived probability of the event occurring.
“Prediction markets have exploded onto the scene,” Cantor Fitzgerald analyst Ramsey El-Assal wrote, noting that contract volumes are expected to maintain an “impressive recent growth trend.”
Scaling through infrastructure
For established trading platforms, the business model offers a low-risk revenue stream. Unlike traditional betting, these companies generate income through transaction fees rather than taking the opposite side of user bets.
This model mirrors the existing equities and crypto trading operations of both firms. Robinhood has already seen significant traction following the launch of its prediction markets hub after the 2024 U.S. election cycle.
The company's prediction market product has become one of its fastest-growing business lines by revenue, with users trading billions in contracts related to sports, politics, and macroeconomics.
Coinbase is following a similar trajectory, though it is currently in the earlier stages of its rollout. Its offering, which utilizes Kalshi’s infrastructure, covers categories including crypto, economics, and global events.
Cantor Fitzgerald suggests that the advantage for these firms lies in their massive retail scale. Large user bases and existing trading infrastructure allow these platforms to drive liquidity and participation almost instantly.
The report also disputes the characterization of these markets as mere gambling. “A common misunderstanding about prediction markets is that they are gambling platforms in disguise,” the report stated.
Instead, the analysts describe the process as trading against other participants to find underpriced or overpriced contracts. This structure allows platforms to earn fees from activity without exposure to losses.
Looking ahead, Cantor sees potential for these markets to serve as institutional tools for risk management and macro hedging. However, the firm notes that the regulatory environment remains “messy,” with federal and state authorities divided on whether these markets constitute derivatives or gambling.
As the regulatory framework stabilizes, Cantor believes firms with significant distribution power, such as Coinbase and Robinhood, will be best positioned to capitalize on the trend.
