Robinhood want more in Prediction Markets

🖋️ This roundup was written and edited by Pet Berisha and Omar El Safy

1. Robinhood Look to Partner with Crypto[dot]com

Robinhood are in talks to add Crypto[dot]com's prediction markets alongside what they already offer, as they look to make a real mark in prediction markets.

Robinhood already have a venue. They built Rothera with Susquehanna. Adding a second exchange's markets on top means routing customers across more than one venue, the way a broker would.

🧠 Opinion: I don't really get why this makes much sense for Crypto[dot]com. They're basically letting their contract inventory be rented by Robinhood, who get to use it as a way to validate demand from retail. And then eventually just self-certify the contracts themselves, and cut out Crypto[dot]com. Maybe I’m being too cynical, and everyone will continue being friendly in this arena!

2. Big Week for Regulators

Washington became the fourth state to block Kalshi's sports contracts, Wisconsin threatened election traders with losing their vote, and the CFTC warned operators over blanket self-certifications, all in the same week.

Washington blocks the sports contracts. On 21 July, King County Superior Court Judge John McHale granted Washington a preliminary injunction against Kalshi's sports contracts, ruling the platform was likely running an unlicensed gambling operation. The ruling rejected Kalshi's central defence: that the Commodity Exchange Act, a federal law, overrides state gambling rules. That is the same argument a New York judge rejected two weeks ago, and the same one Kalshi have now lost in four states: New York, Michigan, Nevada and Washington.

Wisconsin goes after the traders instead. The Wisconsin Elections Commission told voters that trading an election market could cost them the right to vote in it. Their lawyers pointed to a state law disqualifying anyone who has "made or become interested, directly or indirectly, in any bet or wager depending upon the result of the election". Kalshi called it voter suppression.

And the CFTC warned on self-certification. In an advisory on 24 July, staff at the federal regulator said operators have been self-certifying "broad, template event contracts" that bundle many permutations, with different settlement sources and methods, under a single certification. The submissions often skip the terms for each version, which limits the agency's ability to check settlement rules, data sources and manipulation controls. It is the second such warning this year.

3. The Sportsbooks Are Not Getting These Users Back

Prediction markets took 27% of US sports betting during the World Cup.

In the first half of June, Kalshi and Polymarket took nearly three-quarters of all new installs across the major betting and prediction apps: Kalshi 42.3%, Polymarket 31.2%, against DraftKings on 13.7% and FanDuel on 8.9%.

4. Polymarket’s $9M Suspicious Account

An FT investigation found that a Polymarket account in the name of George Cottrell, the financier and convicted fraudster close to Nigel Farage, received roughly $8.8 million in crypto from unidentified sources in October 2024.

The money arrived in tranches: about $7 million from OKX across five transfers, another $1.83 million routed through ChangeNOW. It went on Donald Trump winning the presidency. The position returned $4.46 million in profit, and shortly after the result, the account was emptied into two more wallets.

Who put the money in, and who took the winnings out, remains unknown. Cottrell declined to say who beneficially owned the wallet, or whether any of it supported Farage or Reform UK.

5. The FanDuel and CME Partnership Is Straining

FanDuel's route into prediction markets runs through CME Group. That partnership is now visibly awkward, because CME's chief executive Terry Duffy has been publicly calling some sports prediction markets gambling. And FanDuel are, of course… a gambling company.

CME are a 175-year-old derivatives institution whose reputation rests on not being a casino. So it’s not surprising they’re following a lot of financial services leaders in being sports contract detractors, or at the very least, not wanting to take part in them.

Seven days of trading across every major venue, to 27 July (data from Artemis)

🗞 General

• Kalshi threaten Netflix with legal action over a 'misleading' prediction market documentary trailer (Read more here)

• The Guardian: will prediction markets catch fire in the UK, replicating the US boom? (Read more here)

• Sportico: how World Cup prediction markets actually fared, with the data (Read more here)

• Kalshi took nearly $200 million in trades on LeBron's next team (Read more here)

• Bloomberg: prediction markets are minting a new type of insider trader (Read more here)

• Polymarket refer nearly 100 wallets amid $200 million of insider-trade concerns (Read more here)

• The Economist: prediction markets need better rules (Read more here)

• The Economist: can prediction markets win over Wall Street? (Read more here)

• FT: the forecast for prediction markets (Read more here)

• Gaming bonds lose their allure as the prediction-market threat grows (Read more here)

• The Globe and Mail: people are betting big money on climate disasters (Read more here)

• Pew Research: what we know about the typical Polymarket user (Read more here)

• Prediction markets' lobbying outlays soar as scrutiny ramps up (Read more here)

• Washington Post: the hottest market on Kalshi is one the NBA does not think should exist (Read more here)

• Barron's: sports prediction markets in the spotlight at a House hearing (Read more here)

🤝 Announcements & Partnerships

• Bernstein lift their Robinhood target to $160, seeing prediction-market revenue overtake crypto (Read more here)

• Kalshi target institutions as Talos bring prediction markets onto institutional trading infrastructure (Read more here)

• Kalshi seek approval for perpetual futures tied to gold and silver (Read more here)

• Kalshi roll out midterm hubs ahead of November (Read more here)

• Kalshi open markets on FDA drug decisions and clinical-trial outcomes (Read more here)

• The Premier Lacrosse League quietly struck an exclusive deal with Polymarket (Read more here)

• Hyperliquid plan to add decentralised prediction markets in the HIP-4 upgrade (Read more here)

💰 Funding & M&A

• AI-native prediction market K25.ai hits a $200 million valuation with Amber backing (Read more here)

⚖️ Regulation & Legal

• Polymarket say they were 'surprised' France blocked the site, and plan a legal challenge (Read more here)

• The Czech Republic moves to block Polymarket (Read more here)

• Polymarket and Kalshi restrict Ireland as the regulator threatens a High Court order (Read more here)

• Prediction markets boom as Korea grapples with a legal grey zone (Read more here)

• Nevada congressmen introduce a bipartisan bill to ban sports betting on prediction markets (Read more here)

• The US House weighs a sports-contract ban threatening Kalshi and Polymarket (Read more here)

• Maryland's election chief asks the state prosecutor to investigate prediction markets (Read more here)

• Arizona moves to curb prediction-market wagers by government employees (Read more here)

• A Pennsylvania bill proposes a new regulatory approach for prediction markets (Read more here)

• CME's CEO calls some sports prediction markets gambling (Read more here)

• Kalshi lead a hiring push for legal talent as the state fights multiply (Read more here)

• The NCAA warn prediction markets could intensify threats against athletes (Read more here)

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When you trade on prediction markets (including event contracts, opinion markets and other speculative instruments) your capital is at risk. Risks include price volatility, loss of capital, illiquidity, complexity, evolving regulation and lack of protection. Many prediction market operators do not currently operate in a fully regulated industry, and availability varies by jurisdiction. You may not be protected under financial compensation schemes typically afforded to investors dealing with regulated entities. Nothing in this newsletter constitutes a recommendation to place, hold, or close any position on any market.