Prediction markets have become one of Robinhood's most productive product lines on a per-user basis. Fewer than 2 million of the company's 28 million funded customers had ever placed an event contract as of the second quarter of 2026, yet that roughly 7% of the base generated $156 million in prediction market revenue in a single quarter, Tech Times reported, citing Morgan Stanley analyst Michael Cyprys. Cyprys upgraded Robinhood to Overweight from Equal Weight on September 1 and raised his price target from $124 to $150, implying roughly 43% upside from Monday's close, per the report.
The quarter was a milestone. Robinhood generated $156 million from event contracts in Q2 2026, topping both its $100 million in crypto trading revenue and its equities line for the first time, according to Prediction News, citing The Block and CEO Vlad Tenev. Prediction markets had become Robinhood's third-largest transaction revenue line in just five quarters, per CNBC, Prediction News reported.
Piper Sandler's football-season forecast goes further. Analyst Patrick Moley projected that Robinhood users will trade about 29.7 billion event contracts from September through December 2026, generating roughly $320 million in revenue, or approximately $960 million on an annualized basis, Traders Union reported, citing CNBC's coverage of the note. Moley raised his 2026 and 2027 earnings estimates by 5% and 7% and lifted his price target to $145 from $135 with an overweight rating, per the report. Separately, BTIG said September volume was tracking toward $5.5 billion, according to Prediction News.
The economics per contract have improved since last season. Rothera, Robinhood's prediction-market joint venture with Susquehanna International Group, holds both a CFTC-licensed Designated Contract Market and a Designated Clearing Organization, Tech Times reported, after Robinhood's January 2026 acquisition of MIAXdx. CFO Shiv Verma told the Bernstein Strategic Decisions Conference in May that vertical integration means controlling "the whole product and engineering" and "the better economics," per the report. Rothera processed more than 3.5 billion contracts between its June 4 launch and the end of Q2, according to Robinhood disclosures cited by Tech Times, and Moley estimated about 23% of prediction market volume had shifted to Rothera from Kalshi since June, Traders Union reported. Robinhood management also confirmed that Rothera received CFTC approval to offer football contracts covering wins and spreads, per CNBC's coverage of the Piper Sandler note.
The comparisons point to football as the test. Q2's $156 million was driven substantially by the 2026 FIFA World Cup, which produced peak $4.8 billion single-day volume across all prediction market platforms on June 12, Tech Times reported, citing The Block. July's 6.1 billion event contracts were roughly 20 times the July 2025 level, the report said. Bernstein analysts projected full-year 2026 prediction market revenue of $586 million, up 286% from $150 million in 2025, calling prediction markets "the largest incremental driver" of transaction-based revenue growth, per Tech Times. With $260 million confirmed through the first two quarters, reaching that target requires about $326 million in the second half, driven largely by the NFL season and November's midterm elections.
The regulatory backdrop is unresolved. On August 28, the Ninth Circuit ruled that sports event contracts are not "swaps" under the Commodity Exchange Act, a decision Tech Times described as the industry's most significant legal setback, allowing states to apply gambling laws to Robinhood, Kalshi and Crypto.com sports contracts. New Jersey filed a petition on September 2 asking the Supreme Court to review the Third Circuit's opposite ruling, per Tech Times. As of early September, Polymarket implied roughly a 45% chance of Supreme Court acceptance by December 31, Tech Times reported, citing CasinoBeats.
For Morgan Stanley, the core thesis is penetration, not the current run rate. The remaining 26 million funded customers, about 93% of the base, had never traded a single event contract as of Q2 2026, per Tech Times. Whether football converts them at anything like the intensity of the World Cup crowd is the question the next two quarters will answer.