Crypto and stock trading have been major catalysts for Robinhood (HOOD 0.10%), which helped it beat the S&P 500 (^GSPC +0.65%) in 2025. Robinhood shares almost tripled that year, while the S&P 500 managed a 17% gain.

High-growth companies must continue to innovate if they want to outperform the stock market, and prediction markets are Robinhood’s path to higher gains. The fintech company first rolled out prediction markets in October 2024 for the U.S. election, but it has since expanded to sports and general YES/NO events.

The line between prediction markets and sports betting is razor thin. Prediction markets involve peers predicting if a certain event will occur and putting money on the line in a peer-to-peer structure. Meanwhile, the traditional sports betting model involves people betting against the house, which is the sportsbook operator in the case of sports betting sites.

Here’s how it will affect Robinhood stock.

More capital will flow into Robinhood

Image source: Getty Images.

Although it is very easy to get the technicalities of prediction markets and sports betting mixed up, the shift of more capital into these opportunities sets Robinhood up for a strong run in 2026. Robinhood already had a strong showing for its existing prediction market options, and CEO Vlad Tenev told investors that the segment was growing rapidly going into Q4.

The prediction market can attract new customers to Robinhood, especially during the football season. When it slows down, other sports like the NBA and MLB will quickly take its place on the Robinhood app.

Some of those new customers may also decide to invest in stocks, options, and crypto. Options trading, in particular, is similar to prediction markets, since investors essentially bet on the short-term direction of a stock and how much it will move.

Robinhood is also further presenting itself as an all-in-one investing hub. Few brokerage firms let investors buy stocks, options, and crypto while letting them participate in prediction markets.

Prediction markets are already boosting engagement

Robinhood only started allowing prediction market speculators to trade pro and college football contracts in August 2025. That was enough to more than double the amount of events contracted traded sequentially to 2.3 billion in Q3.

This launch took place in the middle of August, so more than half of Q3 did not feature any football contracts. Robinhood is carrying that momentum into Q4 and told investors it processed 2.5 billion prediction market contract trades in October 2025. That’s more than all of Q3 and implies 3x sequential growth.

Active traders have plenty of options on Robinhood, plus access to low-interest margin loans. The brokerage firm doubled its revenue year over year in Q3, and that type of growth may stick around in 2026 thanks to prediction markets and the growing demand for sports betting.