Robinhood CEO: Prediction Markets at Beginning of Supercycle

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00:00I want to start with these sports wagering capabilities that you've added to your suite

00:06of offerings here, these preset combination contracts for professional football games,

00:10NFL games. It sounds like this is your version of parlays that are offered by traditional

00:15sportsbooks. So what is the difference between a combination trade and a parlay?

00:20Yeah, so as you mentioned, this is part of our big unveil of prediction markets,

00:26which we've offered for a little bit over a year. But remember, we started with just one

00:33prediction market on the platform, which was the presidential election in 2024. And since then,

00:39we've gone to over 1,500 contracts on the platform across pretty much every domain. We've got politics,

00:49we've got world affairs, economics, culture, and we recently added weather. And of course,

00:55as you mentioned, sports. So I think the major innovation here, and why it's been so disruptive

01:03to the sports industry is you can take the general prediction markets infrastructure,

01:09which are markets that trade on regulated exchanges, where buyers and sellers are matched,

01:16and apply them to pretty much everything. Now, of course, sports is an important subset of that,

01:22because there's an existing large market there. But we see a world where actually the percentage of

01:30non-sports contracts grows much faster than sports. And I think several big industries are likely to be

01:38disrupted in the future. Things like insurance, you can imagine with the weather contracts we have on

01:45a platform. People have already pointed out that trading and hedging with an insurance weather contract

01:53could be superior to buying traditional insurance through a broker. So as the market matures and you

02:00see increased in institutional participation, I think we could be at the very beginning of a

02:06prediction market super cycle with growth in volumes and enlisted contracts accelerating from here.

02:15Well, we've had a few incidents now of alleged insider trading in prediction markets. Do you think

02:20insider trading poses a risk to fairness in prediction markets? Or could it help ensure market

02:26accuracy by allowing those with privileged information to participate?

02:31Well, I'm not exactly sure which incident you're referring to. There was an incident in the sports

02:39betting space, which is entirely differently regulated, right? Those are regulated on a state-by-state

02:46basis. And I think they're obviously working hard to address these issues. But what I tell you is

02:54financial markets have had the infrastructure in terms of surveillance and monitoring

02:59to deal with these types of concerns. And they've been dealing with it for decades. Because

03:06obviously, insider trading originated as a market integrity measure for the equities market.

03:13You know, we want to make sure we have protections as an industry to make sure corporate insiders and

03:18other folks weren't using their privileged information about what a company was going to release

03:22to trade ahead of that disclosure being available publicly. So this has pretty much always been

03:30a financial markets thing. And so I think financial markets have the best tools to deal with it.