Robinhood CEO Vlad Tenev defended prediction market traders against gambling critics last week, arguing that speculators are essential for any market to work.
The comments, delivered at the Wall Street Journal’s Future of Everything conference on May 5, landed in the same week that prediction market operator Kalshi closed a $1 billion funding round at a $22 billion valuation.
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“You can’t have a functional financial market without speculators. If everyone’s just hedging, the market is going to break,” Tenev said, responding to a question about whether prediction markets amount to gambling. “As long as you have a strategy, and it’s systematic, who am I to say that you shouldn’t engage in trading of that asset class?”
In a CNBC appearance the same day, Tenev described prediction markets as “a great source of information,” signaling Robinhood’s intent to keep pushing into a product line that barely existed a year ago.
The Defense Lands at a Contested Moment
Tenev’s pitch arrives as the industry sits between record investor enthusiasm and intensifying regulatory pressure.
Kalshi’s $22 billion valuation puts it among the most valuable trading platforms in the country, with more than $52 billion in event contracts traded on its exchange as of March, according to the company.
Kalshi recorded roughly $4.47 billion in volume over the past month, compared with $3.58 billion at rival Polymarket, which itself secured a $2 billion funding commitment from NYSE parent Intercontinental Exchange Exchange An exchange is known as a marketplace that supports the trading of derivatives, commodities, securities, and other financial instruments.Generally, an exchange is accessible through a digital platform or sometimes at a tangible address where investors organize to perform trading. Among the chief responsibilities of an exchange would be to uphold honest and fair-trading practices. These are instrumental in making sure that the distribution of supported security rates on that exchange are effectiv An exchange is known as a marketplace that supports the trading of derivatives, commodities, securities, and other financial instruments.Generally, an exchange is accessible through a digital platform or sometimes at a tangible address where investors organize to perform trading. Among the chief responsibilities of an exchange would be to uphold honest and fair-trading practices. These are instrumental in making sure that the distribution of supported security rates on that exchange are effectiv Read this Term last year at an $8 billion valuation.
The valuations come as bipartisan legislation, including the Prediction Markets Are Gambling Act and the broader STOP Corrupt Bets Act, sits in congressional committee.
Traders on the platforms themselves are pricing the probability of a federal sports prediction market ban in 2026 at roughly 11 percent.
Robinhood’s Own Numbers Tell the Story
Behind the public defense are the figures from Robinhood’s first-quarter earnings.
The platform handled 8.8 billion event contracts in the first three months of 2026, contributing the bulk of $147 million in “other transactions” revenue, a figure that rose 320 percent year over year. Analyst estimates put the prediction markets division on track for roughly $300 million in annual revenue.
The company is also moving to operate its own exchange. Robinhood’s planned acquisition of MIAXdx, a CFTC-regulated futures and clearing venue, would let the broker list and clear contracts directly rather than route them through its Kalshi partnership.
Shares of Robinhood climbed more than 10 percent when the deal was first announced last year.
Insider Trading Cases Test the Narrative
The defense of speculation has been complicated by a string of scandals that emerged the same week as Tenev’s comments.
NPR reported on May 7 that Kalshi has suspended and fined several political candidates this year for betting on their own campaigns, alongside a separate case involving an editor for YouTube creator MrBeast.
Kalshi has explicit rules against trading on events whose outcomes a participant can influence, the company has said.
Federal prosecutors separately charged a Defense Department contractor with using classified information to trade on Polymarket, in what the Justice Department described as the application of national security laws to a new asset class.
The case has prompted calls to ban certain types of event contracts entirely, even as the CFTC has filed suit against Arizona, Connecticut, and Illinois over what it argues is state overreach into a federally regulated market.
Competition Builds Beyond Robinhood and Kalshi
The prediction market space is no longer confined to the original two platforms. eToro acquired Israeli self-custodial wallet provider Zengo in April for roughly $70 million to support on-chain prediction market trading, while Crypto.com launched its own product and Gemini has filed for CFTC approval to do the same.
Coinbase is also reported to be exploring entry into the sector. DraftKings acquired a CFTC CFTC The 1974 Commodity Exchange Act (CEA) in the United States created the Commodity Futures Trading Commission (CFTC). The Commission protects and regulates market activities against manipulation, fraud, and abuse trade practices and promotes fairness in futures contracts. The CEA also included the Sad-Johnson Agreement, which defined the authority and responsibilities for the monitoring of financial contracts between the Commodity Futures Trading Commission and the Securities and Exchange Commiss The 1974 Commodity Exchange Act (CEA) in the United States created the Commodity Futures Trading Commission (CFTC). The Commission protects and regulates market activities against manipulation, fraud, and abuse trade practices and promotes fairness in futures contracts. The CEA also included the Sad-Johnson Agreement, which defined the authority and responsibilities for the monitoring of financial contracts between the Commodity Futures Trading Commission and the Securities and Exchange Commiss Read this Term-licensed exchange last year, routing trades through CME Group, and FanDuel parent Flutter is now operating as a market maker.
The competitive build-out is unfolding alongside institutional integration of the format. ICE launched a Polymarket sentiment data tool for capital markets clients, and Kalshi partnered with Brazilian broker XP in March to take event contracts international.
Robinhood has separately held discussions with regulators in the UK and across the European Union about how prediction markets could be structured outside the United States.
Where the Line Sits
For now, the industry’s growth and its regulatory risks are advancing in parallel.
Tenev’s defense of speculators, delivered at a moment when investors are willing to value Kalshi at $22 billion but federal prosecutors are charging individual traders with crimes, captured both sides of the debate in a single week.
Whether prediction markets settle inside the futures perimeter or get pulled back toward state gambling regimes will likely shape how far the retail event contract category can still scale.
