Robinhood Buys Stake in Crypto.com to Boost Prediction Markets

Robinhood is taking equity stakes in Crypto.com and OG.com, tapping the exchange to power its fast-growing prediction markets business.

Robinhood, the popular US trading app, just made a big move to strengthen its newest and fastest-growing business: prediction markets.

First, what are prediction markets? They let people trade contracts (financial agreements) on whether a real-world event will actually happen — like a Federal Reserve interest rate cut, an election result, or who wins Sunday's game. Instead of betting through a sportsbook, you're trading a contract that pays out if you're right.

Here's what Robinhood announced on Tuesday:

Robinhood will take minority equity stakes (small ownership shares) in both Crypto.com and OG.com, its new prediction markets platform.
OG.com will become an infrastructure and clearing provider — meaning it processes and settles the trades once a customer places a bet.
The service starts rolling out to eligible US customers on September 8.

Why does this matter? Robinhood's prediction market business is booming. Its revenue from these "event contracts" jumped more than 10-fold in one year to $156 million in the second quarter — even as its crypto trading revenue fell 38%. By adding OG.com, Robinhood now has three different partners handling the behind-the-scenes plumbing, so it doesn't rely on just one.

The valuations involved:

Crypto.com is valued at $20 billion, matching a recent investment by Citadel Securities.
OG.com, spun off into its own company, is valued at $5 billion.

OG.com's exchange is regulated by the CFTC (Commodity Futures Trading Commission) — the US federal agency that oversees this type of contract, which adds a layer of trust and legal oversight.

How markets reacted:

Robinhood shares (ticker: HOOD) rose about 3.4% in premarket trading to around $126.
Crypto.com's token, CRO, jumped more than 6% toward $0.063.

The bottom line: Robinhood is investing directly in the technology powering its own products, betting that demand for prediction markets will keep growing. Both companies say the next step could be equity-linked futures, pending regulatory approval.

This is an AI-generated summary. Read the original article at: https://decrypt.co/377676/robinhood-equity-crypto-com-prediction-markets