Robinhood $HOOD ( ▲ 10.93% ) is climbing in premarket trading after announcing a joint venture with Susquehanna to supercharge its prediction markets business. The deal, revealed after Tuesday’s close, creates an independent futures and derivatives exchange and clearinghouse. Robinhood will control the venture, while Susquehanna provides liquidity, and operations are expected to start next year. As part of the move, the venture is also acquiring 90 percent of MIAXdx, a derivatives exchange previously tied to FTX.
Right now, Robinhood sources prediction market probabilities from KalshiEx and ForecastEx. With this venture, the company would gain the ability to run its own event contracts business, capture a larger share of revenue, and tap into its massive user base for distribution.
Robinhood highlighted the momentum behind the product line, noting that prediction markets have become its fastest-growing revenue segment. More than 9 billion contracts have traded in the first year, across over 1 million users. The company said that running a more robust institutional-grade exchange will let it expand contract offerings and move faster on product development.
Still, not everyone is celebrating. Bank of America analysts recently flagged the rapid rise of prediction markets and online gambling as a source of emerging credit risks for some lenders.