Everything Can Be Gambled—A New Era of “Nationwide Gambling” in America!

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In a market frenzy described by analysts as "casino-like," retail trading platform Robinhood is earning astonishing returns from speculative activities far beyond traditional stocks. Its latest financial report reveals a new growth point that is exploding: prediction markets.

Robinhood announced after the close on Wednesday that its third-quarter revenue doubled to a record $1.27 billion, with net profit more than tripling from the same period last year to $556 million. The robust performance was mainly driven by non-stock trades. Under the Trump administration’s relaxed regulation and speculative climate, the company’s share price has soared about 450% since the 2024 election.

In this stellar earnings report, a small but rapidly growing business segment stands out. Nearly 90% of trading revenue comes from non-stock trades such as options and cryptocurrencies, with about $25 million coming from its emerging prediction market platform. This indicates that betting on events ranging from sports to political elections is moving from niche to mainstream and is becoming a new revenue source for financial platforms.

This trend is not unique to Robinhood but is a microcosm of the entire industry. According to Piper Sandler analysts, prediction market platforms Kalshi and Polymarket saw trading volume nearly double in October. This nationwide speculative mindset is permeating all aspects of the economy, blurring the line between investing and gambling, and having a profound impact on markets and investors.

Betting on Everything: Robinhood's Prediction Market Map

The prediction market business is quickly becoming a key part of Robinhood’s diversification strategy. Through collaboration with the Kalshi platform, Robinhood allows users to buy and sell contracts on “yes” or “no” outcomes of future events, essentially turning real-world events into tradable financial products. Although the current $25 million in revenue is only a small fraction of its total, its explosive growth potential cannot be ignored.

Robinhood CEO Vlad Tenev revealed on social platform X that cumulative event contract trading volume for its prediction market has surpassed 4 billion, with over 2 billion just in the third quarter. He emphatically stated, “This is just the beginning.”

To capitalize on this trend, Robinhood has rapidly expanded the types of tradable events from initial sports and finance into politics, entertainment, and technology. Users can now predict not only the S&P 500’s year-end level, but also who will be Time Magazine’s Person of the Year, which movie will be Oscar-nominated, and even the number of SpaceX launches in a year. Reports say Robinhood executives are open to acquiring companies in the prediction market space, underscoring their ambition.

Policy “Green Light”: The Trump-era Speculation Hotbed

Robinhood’s rise is closely tied to the current market environment. Since last November when Trump won the election, Robinhood’s stock has soared roughly 450%, vastly outperforming the S&P 500’s 17% gain over the period, making it one of the biggest winners among large-cap companies. According to Bloomberg analysis, multiple Trump policy moves have fueled this speculative craze.

On one hand, the President’s public support for the cryptocurrency industry, signing bills legalizing stablecoins, and executive orders expanding government use of digital assets have directly benefited Robinhood’s crypto trading business. On the other hand, global trade disputes have caused sharp market fluctuations, attracting swarms of traders hoping to profit. For example, in April when tariff prospects changed rapidly, Robinhood’s stock trading volume surged 123% year-on-year.

At a deeper level, a broader atmosphere of regulatory loosening and encouragement of speculation is taking shape. According to the Wall Street Journal, Washington is not reining in speculation, but rather “stepping on the gas.” A typical case: Intercontinental Exchange (ICE), which runs the New York Stock Exchange, invested as much as $2 billion in prediction market platform Polymarket, while Donald Trump Jr.’s venture fund is also an investor.

This is viewed as a capital bet on “the speculation industry itself,” and reflects how politics, capital, and speculation have become tightly intertwined. As Accuvest CIO Eric Clark said: “The market as a whole is becoming more and more like a casino, and Robinhood is a direct beneficiary of this kind of market.”

Market Doubts: “New Normal” or Eve of a Bubble?

Despite its stellar results, Robinhood and the market frenzy it represents are coming under increasing scrutiny and doubt. The surge in its share price has pushed valuations to a high level; as of Tuesday's close, its price-to-earnings ratio was about 62, far higher than the peer average of 22. This makes the company extremely sensitive to any performance results that fall short of expectations.

Some analysts worry whether this cycle-driven frenzy can be sustained. Charles Bendit of Rothschild & Co Redburn is the only analyst tracked by Bloomberg with a “sell” rating on the company. He believes “Robinhood’s fundamentals reflect cycle strength, but the valuation suggests a durability across cycles which the business has yet to prove.” Freedom Capital Markets chief market strategist Jay Woods raised the key question: “Just how much good news has already been priced in?”

Such concerns echo warnings from institutions such as the International Monetary Fund (IMF). The IMF noted in its semi-annual Financial Stability Report: “Risk asset prices are far above fundamentals, increasing the odds of a disorderly adjustment.” When a mass mindset of speculation combines with easy money and light-touch financial regulation, systemic vulnerability increases. For investors, distinguishing structural market shifts from irrational bubble fevers is becoming harder and more crucial than ever.

Risk Disclosure and DisclaimerThe market carries risks and investment must be cautious. This article does not constitute personal investment advice, nor does it take into account individual users’ specific investment objectives, financial circumstances, or needs. Users should consider whether any opinions, views, or conclusions in this article are suitable for their unique circumstances. Investing accordingly is at your own risk. ```