Robinhood
CEO Vlad Tenev defended prediction market traders against gambling critics last
week, arguing that speculators are essential for any market to work.

The
comments, delivered at the Wall Street Journal’s Future of Everything conference
on May 5, landed in the same week that prediction market operator Kalshi closed
a $1 billion funding round at a $22 billion valuation.

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“You
can’t have a functional financial market without speculators. If everyone’s
just hedging, the market is going to break,” Tenev said, responding to a
question about whether prediction markets amount to gambling. “As long as
you have a strategy, and it’s systematic, who am I to say that you shouldn’t
engage in trading of that asset class?”

In a CNBC
appearance the same day, Tenev described prediction markets as “a great
source of information,” signaling Robinhood’s intent to keep pushing into
a product line that barely existed a year ago.

The Defense Lands at a
Contested Moment

Tenev’s
pitch arrives as the industry sits between record investor enthusiasm and
intensifying regulatory pressure.

Kalshi’s
$22 billion valuation puts it among the most valuable trading platforms in the
country, with more than $52 billion in event contracts traded on its exchange
as of March, according to the company.

Kalshi recorded roughly $4.47
billion in volume over the past month, compared with $3.58 billion at rival
Polymarket, which itself secured a $2 billion funding commitment from NYSE
parent Intercontinental Exchange last year at an $8 billion valuation.

The
valuations come as bipartisan legislation, including the Prediction Markets Are
Gambling Act and the broader STOP Corrupt Bets Act, sits in congressional
committee.

Traders on
the platforms themselves are pricing the probability of a federal sports
prediction market ban in 2026 at roughly 11 percent.

Robinhood’s Own Numbers
Tell the Story

Behind the
public defense are the figures from Robinhood’s first-quarter earnings.

The
platform handled 8.8 billion event contracts in the first three months of 2026,
contributing the bulk of $147 million in “other transactions”
revenue, a figure that rose 320 percent year over year. Analyst estimates put
the prediction markets division on track for roughly $300 million in annual
revenue.

The company
is also moving to operate its own exchange. Robinhood’s planned acquisition of
MIAXdx, a CFTC-regulated futures and clearing venue, would let the broker list
and clear contracts directly rather than route them through its Kalshi
partnership.

Shares of
Robinhood climbed more than 10 percent when the deal was first announced last
year.

Insider Trading Cases Test
the Narrative

The defense
of speculation has been complicated by a string of scandals that emerged the
same week as Tenev’s comments.

NPR
reported on May 7 that Kalshi has suspended and fined several political
candidates this year for betting on their own campaigns, alongside a separate
case involving an editor for YouTube creator MrBeast.

Kalshi has
explicit rules against trading on events whose outcomes a participant can
influence, the company has said.

Federal
prosecutors separately charged a Defense Department contractor with using
classified information to trade on Polymarket, in what the Justice Department
described as the application of national security laws to a new asset class.

The case
has prompted calls to ban certain types
of event contracts entirely, even as the CFTC has filed suit against Arizona, Connecticut, and
Illinois over what it argues is state overreach into a federally regulated
market.

Competition Builds Beyond
Robinhood and Kalshi

The
prediction market space is no longer confined to the original two platforms. eToro acquired Israeli
self-custodial wallet provider Zengo in April for roughly $70 million to support
on-chain prediction market trading, while Crypto.com launched its own product
and Gemini has filed for CFTC approval to do the same.

Coinbase is
also reported to be exploring entry into the sector. DraftKings acquired a
CFTC-licensed exchange last year, routing trades through CME Group, and FanDuel
parent Flutter is now operating as a market maker.

The
competitive build-out is unfolding alongside institutional integration of the
format. ICE
launched a Polymarket sentiment data tool for capital markets clients, and
Kalshi partnered with Brazilian broker XP in March to take event contracts
international.

Robinhood
has separately held discussions with regulators in the UK and across the
European Union about how prediction markets could be structured outside the
United States.

Where the Line Sits

For now,
the industry’s growth and its regulatory risks are advancing in parallel.

Tenev’s
defense of speculators, delivered at a moment when investors are willing to
value Kalshi at $22 billion but federal prosecutors are charging individual
traders with crimes, captured both sides of the debate in a single week.

Whether
prediction markets settle inside the futures perimeter or get pulled back
toward state gambling regimes will likely shape how far the retail event contract category can still scale.

This article was written by Damian Chmiel at www.financemagnates.com.

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