FM Intelligence found in an analysis published today (Tuesday) that Robinhood earned about 1.05 cents per event contract in the third quarter, compared with 1.15 cents three months earlier. Customers traded about 21% more contracts during the quarter, while revenue from those contracts increased 11%.
From July through September, event contracts generated $173 million, exceeding the $120 million Robinhood earned from crypto and accounting for about 12% of its net revenue.
Among the retail platforms covered by FM Intelligence, Robinhood is the only one that discloses both the number of contracts and the product's revenue. Its ratio is therefore the sole public benchmark for brokers setting prices for the product.
Other retail firms are entering the market. IG Group agreed in July to pay up to $1.3 billion for Underdog, while Coinbase said its prediction markets generated more than $200 million in annualized revenue in the third quarter.
London's trading industry is coming home!
Trading Increased at About Twice the Pace of Revenue
Customers traded 16.4 billion contracts in the quarter, compared with 13.6 billion previously. Revenue rose from the $156 million FinanceMagnates.com reported for the second quarter.
The same division generated 1.18 cents in the first quarter. Based on the rounded reported figures, the latest decline from the second quarter was between 7% and 9%.
On its October 27 earnings call, Robinhood's management offered part of the explanation, describing a pricing change made after the company took over an exchange with Susquehanna and renamed it Rothera.
"We lowered pricing for customers when we bought Rothera," Chief Financial Officer Shiv Verma said.
Verma said the change did not affect Robinhood's take rate, and later linked lower rates to the types of contracts customers traded. Non-sports contracts accounted for about 30% of activity in the quarter, compared with 15% in the second quarter, he said.
The ratio does not distinguish between those two factors. Since each contract pays out no more than $1, a contract purchased for a few cents counts the same as one bought near even money. Robinhood discloses the number of contracts traded, but not the average price paid.
Rothera Now Accounts for Some of the Revenue
The reported figure includes revenue from a second business, too. According to Robinhood's earnings presentations, Rothera—the joint venture it controls with Susquehanna International Group—contributed $28 million of the $173 million, compared with $17 million a quarter earlier.
The 1.05 cents figure combines exchange revenue with what Robinhood earns from its own customers, so it overstates what a retail broker without an exchange might expect. The analysis removes Rothera to show the deeper decline in the rest of the revenue line.
Rothera is expected to account for a growing share. Verma said it would become Robinhood's primary exchange, with Crypto.com in second place, and that most flow would pass through the two by early next year.
Previously, that flow went elsewhere. After Robinhood launched event contracts in March 2025, it accounted for more than half of Kalshi's volume, FinanceMagnates.com reported in January.
In September, Robinhood took a stake in Crypto.com and its prediction markets unit, OG. Its quarterly filing says that, in return for routing orders there, it can earn up to 10% of Crypto.com and its affiliates over three years.
States are also restricting the product. According to the filing, Robinhood has stopped offering new sports contracts in Nevada, Michigan and Ohio. New taxes on prediction market revenue in North Carolina and Kentucky take effect on January 1.
The analysis also compares Robinhood's event contract revenue with Plus500's group revenue, drawing on volume estimates from FM Intelligence's broker volumes tool.
The full FM Intelligence analysis provides revenue per contract with and without Rothera, the sports share implied by management's comments, and a fourth-quarter revenue range of $156 million to $198 million.
Source: www.financemagnates.com. Adapted by NBTC.
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