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Robinhood reported earnings recently. It showed that its revenue from its crypto segment falling, but some of that is shifting to its prediction markets business. The platform is saying that the annualized revenue from its event contracts were about four hundred and fifteen million dollars in the first quarter, compared to cryptos implied five hundred and thirty six million dollar pace.
La Tene is here.
He's chairman and CEO of Robinhood and he joins us now on set, Ladys. Always good to see you. Prediction markets revenues, as I mentioned, now bigger than that from stock trading. The business did not exist just a few quarters ago. When does it overtake crypto revenues?
And that's a good point. It's a very new business for us. It's nascent as an asset class. Prediction markets really entered the mainstream in the twenty twenty four election, which is when we launched our offering, and I think we're just at the beginnings of the of this new asset class.
Does it become the biggest business.
Well, I don't really think about it that way. So Robinhood is a financial super app. We're striving to serve all of our customers financial needs across every asset class and every financial transaction worldwide. So I think there's plenty more room to run. But there's also plenty of room to run in our other business lines. We have eleven lines of business generating one hundred million in revenue or more per year, with plenty more on deck.
Well, and we're going to get to more on crypto. But I do want to stay with prediction Markets for a second because it's kind of like what everybody is talking about right now. It's a big part of our in fact, it's a big part of Bloomberg Crypto. Now, how much is sports related on the platform? Because our Bloomberg intelligence team does an analysis of call Shee for example, they say eighty to ninety percent roughly of the activity
on call she is sports related. How much of that is sports related on Robinhood.
Yeah, it's a big chunk of it for sure. But we are seeing north, We're seeing nonsports contracts continuing to gain share, and sports is just easily understandable. Right You're seeing prediction Markets being a disruptor and an alternative to traditional sports books, and there's already an established behavior there, whereas general event trading is a little bit newer. It's
harder for some customers to wrap their heads around. We do a lot to educate customers on that, but we see it growing and in fact, as the product matures, we see a world where actually nonsports eventually overtakes sports.
I'm still going to stick with prediction markets. It's just too interesting. So is Robinhood. You're partnering right now on infrastructure, but is the goal for robinhood to have its own integrated prediction market exchange and clearing system.
We did announce a joint venture with Susquehanna, which is one of the leading market makers to launch rather era. So we acquired ledger x if you're familiar, which is a long established futures DCM and DCO and that actually is going to go live this quarter. So for a while we've been partnering with third parties to provide the exchange and clearing infrastructure, but now we have a vertically integrated stack later this quarter.
So what role would college you play in Robinhood's ecosystem once you fully launch that one?
They would be an alternative exchange provider along with forecast x, and who knows, we might also integrate with more exchanges. Really, what we're looking for is how do we give customers choice and flexibility and give them the best pricing and the best access to contract selection.
Any names in your list other than College that you're looking to.
Chat, I mean, I think we've had conversations with all the with all of the players. I should also say on the Rotherra side, a lot of people are interested in coming to roth Era as well because they know Robinhood brings a lot of distribution, a lot of usage. So we've been hearing from, you know, folks that want to integrate with rother Era at launch and they see the combination of Robinhood and SIGG as a very very strong one to bring liquidity into the market.
You know, I've spoken quite a bit about prediction markets with other CEOs. Rick Worcester of Schwab, for example, they don't offer prediction markets right now, and he's told me that when and if they do offer, they don't want to offer sports because he sees that as gambling and he doesn't see that as being aligned with his own
financial services and what he's doing at his firm. What would you say to critics who say, well, maybe we understand prediction markets and event based contracts on the economy and certain other parts, maybe oil prices, but what we don't see sports fitting into financial services?
What would you say to those critics?
I mean, I think the reality of it is sports is a big part of the economy. A lot of money is spent in sports, an increasing amount, and I think in particular with the potential automation that we see happening from AI, sports is one of those things that is continuing to be human. You don't really want to watch self driving cars circling a track. It's less entertaining. So I think sports is actually big business and it's a critical part of the economy, much more so than
even twenty years ago. When you look at these franchises catching you know, ten billion plus valuations, it's increasingly global. So the two worlds are starting to converge. And yeah, I think this new asset class is going to continue to grow and develop, and I think you know a lot of competitors Historically you saw this with crypto, right, they sort of dismiss the asset class and then eventually you'll hear the story shifting to Okay, well, yeah, we'll
offer it, but only in these ways. And then eventually the story becomes while you know, overwhelming demand from our customers and now we're offering it and we have to compete with with you know, where our customers are going. So i'd imagine it's the same thing. And it's hard for the incumbents to build and launch new stuff, So at first, while they're trying to figure out how to build it, they tend to take on a more defensive posture.
Sometimes I wish we could talk prediction markets, but I have to ask you about Trump accounts. Can you explain briefly and maybe succinctly because we have a ton more questions. How are you working with B and Y and Treasury? What exactly is Robinhood doing versus why versus Treasury to administer Trump accounts?
Yeah? Sure, so Trump accounts. For those that might not be familiar, it's a brokerage account from birth for every newborn seeded with one thousand dollars by the Treasury, and Robinhood was chosen in partnership with B and Y. Robinhood is going to be the sole initial trustee and broker for the Trump Accounts, which means we're not only designing and building the Trump Accounts App, which the aspiration will be is it's going to be the best product that
the government's ever been associated with. That's what we hope for and what we're building with the National Design Studio. But we're also the broker, so the accounts and the assets are going to be custodied custody with US and B and why the storied oldest bank in the US is serving as financial agent and national infrastructure manager.
Would parents be able to roll over those funds to another brokerage.
Yeah, eventually there will be rollovers, so you'll be able to do an accounts to the brokerage of your choice. There's no firm data on that. Everyone's eyes are on the July fourth launch and just making sure that the Trump Accounts app and the initial experience is just really top notch.
You've lagged some significant costs in relation to this program. Can you explain how the benefits outweigh the cost of this.
Yeah, so there was a lot of confusion on this. I'm glad that I have a chance to address it. So we announced their earnings that there's going to be one hundred million cost with developing the Trump accounts, So not all of that has been incurred already, but that's what we anticipate it will be, and it will be
profitable for us. So this is we're serving as a government subcontractor and it's on a cost plus basis, so we're kind of billing for the costs, and really the cost comes from the fact that the US government wants these accounts and the service to be handled really, really well by humans, right, So we have to staff up significant servicing because you know, there's five point five million
children that have signed up already. There's seventy million children under the age of eighteen in this country, so we've got to be ready to scale up to tens of millions of accounts relatively quickly with like top notch support and reliability.
Hey, I've lad one more before we go. Coinbase today cutting fourteen percent of staff. Insites, Vollada, markets, AI, Paypalplockcrypto dot Com they've had layoffs.
What does that say to you about the industry right now?
I mean, I don't know what is going on in the internals of other companies.
I think that is it a related or is it crypto related.
I'm not sure. Maybe it's a combination of both. I think the timing, of course, is notable right in the this of earning season, but I can't really share more than that.
Glad we wish we had more time, always left catching up with you always a pleasure. Thanks so much for joining us. Lad ten Evies, chairman and CEO of Robin Who and