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We're going to stay with robin Hood because the company this week rolled out updates to was AI assistant and prediction market offerings. In fact, prediction markets are now Robinhood's fastest growing product line by revenue, with analyst at Citizens expecting fivefold growth by twenty thirty. So joining us live on the heels of that announcement is the CEO of robin Hood, Flat Teneve and my Bloomberg Crypto co host
Tim Senwik joins us now as well. Loatt, It's great to speak with you, and I want to start with these sports wagering capabilities that you've added to your suite of offerings. Here these preset combination contracts for professional football games NFL games. It sounds like this is your version of parlays that are offered by traditional sportsbooks. So what is the difference between a combination trade and a parlay?
Yeah, So, as you mentioned, this is part of our big unveil of prediction markets, which we've offered for a little bit over a year. But remember we started with just one prediction market on the platform, which was the presidential election in twenty twenty four and Since then, we've gone to over one thousand, five hundred contracts on the platform across pretty much every domain. We've got politics, we've got world affairs, economics, culture, and we recently added weather,
and of course, as you mentioned, sports. So I think the major innovation here and why it's been so disruptive to the sports industry is you can take the general prediction markets infrastructure, which are markets that trade on regulated exchanges where buyers and sellers are matched, and apply them to pretty much everything. Now. Of course sports is an important subset of that because there's an existing large market there.
But we see a world where we're actually the percentage of nonsports contracts grows much faster than sports, and I think several big industries are likely to be disrupted in the future, things like insurance. You can imagine with the weather contracts we have on a platform. People have already pointed out that, you know, trading and hedging with a insurance weather contract could be superior to buying traditional insurance
through a broker. So as the market matures and you see increased in institutional participation, I think we could be at the very beginning of a prediction market supercycle. With growth in volumes and enlisted contracts accelerating from here.
Well, we've had a few incidents now of alleged insider trading in prediction markets. Do you think insider trading poses a risk to fairness in prediction markets or could help ensure market accuracy by allowing those with privileged information to participate.
Well, I'm not exactly sure which incident you're referring to. There was an incident in the sports betting space, which is entirely differently regulated, right, those are regulated on a state by state basis, and I think they're obviously working hard to address these issues. But what I tell you is financial markets have had the infrastructure in terms of surveillance and monitoring to deal with these types of concerns,
and they've been dealing with it for decades. Because obviously, insider trading originated as a market integrity measure for the equities market. We want to make sure we have protections as an industry to make sure corporate insiders and other folks weren't using their privileged information about what a company was going to release to trade ahead of that disclosure
being available publicly. So this has pretty much always been a financial markets thing, and so I think financial markets have the best tools to deal with it.
Glad, I'm wondering about prediction markets, and specifically Robinhood and others too, if they offer enough protections to consumers against addictive betting, how do you solve for that? At Robinhood, I.
Mean, I think our philosophy is, if you look at prediction markets, there's a tremendous amount of value in the diversity and variety of contracts and what we're actually seeing, similar to trading, a lot of people that actually have strategies, So it's not you know, it's not as much of like I'm buying a team because I'm a fan of it, But there's systematic trading and people are analyzing these things and they have strategies around it, and it goes beyond sports.
You guys were mentioning the Warner Brothers merger situation. If you notice the question on everyone's mind is what's likely going to happen to Warner Brothers. Who's going to acquire the company? Is it going to be Netflix or Paramount, Skuidance or neither of the above. And right now, we look at the stock prices right and we try to
reverse engineer. What's happening with the situation. Well, there's a prediction market that we illustrated on the platform, and you can see last night it was showing fifty five percent chance Paramount would actually be the ultimate acquier. This morning it went to seventy five percent. Netflix. So even in terms of what value they provide to the news, it can be incredibly powerful and more direct to zero in
on the results of that specific outcome. And now I'm not saying everyone should be trading prediction markets any derivatives market. I think people have to make sure it's right for them. But I think they're resonating quite strongly with our active traders, and also I think they're a great way for other folks who may be interested in trading to learn about the new asset class.
It's an incredibly competitive space, flat, I don't need to tell you that, and you have companies and people being minted billionaires as a result of the competitive space. Right now, I'm wondering about the dynamics and how you view the competitive dynamics and whether you have an edge after acquiring ledger X. Talk about that a little bit.
Yeah, I mean, right now we're the largest broker in the space, and actually the brokerage landscape is not very competitive. I mean, we're pretty much the only game in town in terms of the exchanges offering prediction market services. I think there's a big argument to be made for this
to be an increasingly institutional business over time. In the same way that crypto markets started off being exclusively retail and have sort of like built up institutional adoption over time, I think you can make a perhaps even stronger argument that the same is going to happen with prediction market
event contracts. If you just look at the trillions that are being used are being deployed into interst rate futures and swaps to hedge interest rate risk by institutions, prediction markets offer a way more direct mechanism for actually hedging that risk. So our acquisition, our partnership with SIG to acquire ledger x, I think is a way for us to tap into what we believe will be a growing
institutional market for this asset class. And if you couple that with our broad retail reach, I think that positions well to continue growing with the space, if not faster than the aggregate growth in the sector.
What's the effect that that acquisition has on. Let's say call Schaef for example, that is a partner of yours right now, but also a competitor.
Yeah.
I mean the more prediction market exchanges join the market, the more price competition there is, right, and we see a world where it's increasingly multipolar. I think there's going to be multiple dozens prediction market exchanges, and I think that will lead to a great outcome for ultimately the traders in the space, because the more exchanges there are, the more we put pressure on the transaction fees and
get them to be close to rock bottom. And what happens is more liquidity comes into the space, more institutional interest, and prices go down. And as with any ass at, you know, crypto equities options Robin who is just focusing on providing the best execution for customers. So we connect to a wide variety of exchanges and market centers to facilitate that.
A lot for a lot of people, it's not clear what the difference is between prediction markets and outright gambling. Are you concerned about potential hit to volumes if you're forced to exit certain states over conflicts with gambling regulators.
Yeah, I think a lot of times this discussion of you know, is it trading or gambling gets into sort of a debate on the meetings of words. But one clear benefit of prediction markets is that these contracts are traded on regulated exchanges where buyers and sellers meet together. And essentially this has a lot of downstream effects, right. One of them is you get a wide variety of contracts being offered. You know, we've gone from one to
thousands in the past year. You could see a world where it gets to tens of thousands and hundreds of thousands, and pretty much any event could be priced in real time and tradeable. The second is because these happen on an exchange where buyers and sellers meet, our incentives aren't to trade against our customers, and that's how a lot of these you know, state regulated operators run. Their business
model is not to exchange orders. It's actually to trade against the customer, which basically you know, and they kind of jiu jitsu around this when when they get asked, but there they make money when their customers lose. Our benefit. Our incentive as a business is to bring on customers and have those customers account balances grow steadily and monotonically
over time. So I think we're actually incentive to grow with our customers, and that leads us to offering a wide variety of products for them to invest and trade in, not just prediction markets, which are enticing to bring new people in, but also things like Robinhood strategies, retirement, the Cortex AI tools that are continuing to proliferate throughout the platform.
Yeah.
So our vision is, really, can we build a financial super app where all of your financial needs are met in one place and all of your all of your finances are managed to the best of our ability at Robinhood.
Well, speaking of all financial needs, there's a lot of chatter on Trump accounts for kids, where the government seeds investment accounts with one thousand dollars for children as part of the One Big, Beautiful Bill. Are you still positioning yourself for consideration? Have you heard who else might be in the running?
Yeah? Well, I've spoken to the President and obviously the government about this personally, and basically, while we can't give you the details of what we're involved in or what we're talking about, I think this is incredibly important. I think we have a huge risk in this country of people not believing in the free markets and in the financial system because they don't have skin in the game. I think it's especially a problem now when we're in
this massive wave of AI driven disruption. So you know, you're seeing AI products being adopted at an accelerating rate, but at the same time AI being generally unpopular because people are pretty pretty worried about what impact it's going to have on them and their jobs. And I think the best way to actually counteract this is from an early age, give people a stake in what's being built
in the great industries of this country. So I think it's a great initiative, and we've assured them that we're standing ready to help in the maximum way possible.
To Scarlett's point, Ray Dalio's going to donate to Trump accounts and Connecticut Blackrock is going to match Trump account contributions for employees. A lot of companies are wondering if their companies are going to do it, any plans to do that for Robinhood employees.
I think we're thinking of a lot of things, and what I'm mostly interested in is, you know, obviously not to downplay Robinhood has thousands of employees, but I think our value is we serve tens of millions of customers in the US and we've got you know, over a third of a trillion in assets on the platform, So we're sort of like thinking bigger, like how can we help every single company and every single individual in this
country plug into the system. Of course we're interested in thinking for our employees, but the impact of that is like relatively low when it comes to the whole country, and we're really thinking about how can we help the whole country and this program be as successful as possible.
Heyfa, before we let you go, I want to talk a little more about the core tech AI offering and what you're trying to build in this financial super app at Robinhood. If you think about this from the perspective of and you made clear you don't want this to be an advisor by any means, but you want people to be able to ask questions to the app about different stocks or help find stocks. How is it powered, Like, what is the AI that powers core techs AI, how
is it trained? And what's the underlying model that you're using.
Yeah, so it's an agentic system, which maybe you guys have heard this buzzword before, but it's not actually just purely the underlying models. We use a variety of models under the hood to power different You can think of
them as experts on our platform. And I think the big advantage that we have when you compare it you say, Chat, GPT or other lms or agents, is we have not just the personal information about customers and their accounts and their activity with us, but we also have real time market data across multiple assets streaming into the system, and that allows us to actually ground the information we provide
with a high degree of accuracy. So now we can tell you not just the real time prices for stocks, but also real time predictions and what's likely to happen around thousands of real world events. So you can imagine all of this is culminating into if you're a customer of Robinhood, you no longer have to rely on external sources for the inspiration and the idea behind a trade.
It used to be that Robinhood is pretty much just a tool to execute the trade, but now the goal is to actually help you with the research, the idea, generate the inspiration behind the trade and prediction markets Cortex and Robinhood's social which is a new social network we unveiled at Hoods Summit a couple of weeks ago. Are all converging to drive this evolution and what Robinhood is becoming.
So Cortex is going to be available to your Gold subscriber, so it sounds like it's a premium service. They'll be paying an additional fee to get these tools. Do you plan to launch any kind of basic version.
Of this, you know, we're thinking about that. Like Cortex and Robinhood Gold in general, it is a subscription service, but it's very accessible. So it starts at five dollars a month, fifty dollars for the year, and we've seen that over a third of customers that sign up to Robinhood on a quarterly basis actually adopt the Gold subscription
relatively quickly. So we see a world where the attachmate of our Gold subscription offering goes up even more and it really rivals the attachmates of the leading subscription offerings industry wide, not just financial services, but also you look at music streaming video and I think we can be best in class there. So of course, nothing said in stone.
We're going to continue to iterate. We might end up with as you suggest, a basic version, but right now we're not seeing any bottlenecks to adoption of Cortex from the Gold subscription.
All right, good stuff, Vlad. Really appreciate your joining us today. Lad ten Of is Robin Hood CEO, and I also want to thank my co host. I'm Bloomber Crypto Tim Stenovik.