HOOD Bets Sports, IBKR Bets Utilities—How Fintechs Are Fighting Over Prediction Markets

Interactive Brokers Group Inc. (NASDAQ:IBKR) and Robinhood Markets Inc. (NASDAQ:HOOD) are making opposite bets on the $63 billion prediction market boom—one on utilities and the other on sports. Peterffy: “We Don’t Rely On Sports” During Monday’s Q4 earnings call, Peterffy made clear that IBKR isn’t chasing sports betting. The company is targeting temperature contracts that utilities can use to hedge electricity demand. “Interactive Brokers does not rely on sports,” Peterffy said, adding that institutional clients like utilities will start onboarding “sometime in the course of the year.” IBKR’s ForecastEx exchange traded 286 million contract pairs in Q4—up from just 15 million in Q3. The platform now lists over 10,000 instruments. That approach sidesteps the regulatory chaos hitting sports-focused platforms entirely. The Regulatory Problem: Massachusetts Just Ruled Against Sports A Massachusetts court ruled earlier this month that Kalshi’s sports contracts are illegal gambling, not regulated derivatives. Kalshi is the CFTC-regulated exchange that powers prediction markets for both Robinhood and Webull Corp. (NASDAQ:BULL). The ruling forced Kalshi to block Massachusetts residents from trading sports contracts. Tennessee, Connecticut, and New York have issued similar orders, arguing platforms need gaming licenses to offer sports betting—even if the CFTC approved the products. That creates a problem: if more states follow Massachusetts, platforms built around sports contracts lose access to huge markets. Robinhood bet heavily on sports, which means it’s directly exposed to this regulatory risk. Robinhood Doubles Down On Sports Robinhood’s strategy is the opposite. The company launched prediction markets in March 2025 and has already processed over 11 billion contracts, generating approximately $100 million in annualized revenue. During the Q3 earnings call in November, CEO Vlad Tenev said volume hit 2.3 billion contracts in Q3, with October alone reaching 2.5 billion contracts—bigger than the entire quarter. Much of that volume comes from NFL games, NBA matchups, and college football. Tenev called prediction markets potentially “one of the largest asset classes” and said the company stands at “the very beginning of a prediction market supercycle.” The problem is Robinhood relies on Kalshi to power its prediction markets. That means Robinhood faces the same state-level regulatory challenges that just hit Kalshi in Massachusetts—the exact risk IBKR is avoiding by skipping sports entirely. SoFi Sits On The Sidelines SoFi Technologies Inc. (NASDAQ:SOFI) reports Q4 results January 30 and hasn’t entered prediction markets. The company’s bank charter imposes regulatory constraints that pure brokerages don’t face. With competitors generating $100+ million in annualized prediction markets revenue, analysts will likely ask CEO Anthony Noto whether the absence is a strategy or missed opportunity. What Happens Next: Earnings Will Tell The Story Three key earnings reports will show which strategy is working: SoFi (SOFI) reports January 30—traders will watch whether Noto addresses the decision to skip prediction markets while competitors rake in revenue. Robinhood (HOOD) reports February 10—Q4 volume will reveal if the Massachusetts ruling is scaring users away or if growth is continuing despite regulatory pressure. Webull (BULL) reports around February 23—the company faces similar sports contract exposure as Robinhood. Prediction markets hit $63.5 billion in volume last year—up 302% from 2024. The category is real. The question is whether sports-focused platforms can survive state regulators, or if IBKR’s utility-focused approach is the only path forward. Image: Shutterstock