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Robinhood Bolsters Prediction Markets With FTX-Linked Acquisition

Robinhood Markets is making a bold move into the fast-growing prediction markets space, acquiring a 90% stake in LedgerX, a platform with ties to the now-defunct cryptocurrency exchange FTX.

The $50 million deal, which also involves trading firm Susquehanna International Group, comes just hours after Robinhood announced the launch of its own futures and derivatives platform with options for prediction markets. The acquisition of LedgerX, one of the few solvent companies connected to FTX, positions Robinhood to challenge established players like Kalshi and Polymarket.

Prediction markets, where participants bet on the outcomes of events like elections or sports matches, have surged in popularity in recent years. The sector saw significant growth in 2024, driven in part by increased interest in political wagers.

"Through our retained equity stake, the transaction announced today will provide MIAX with access to the growing prediction markets on an expedited basis," said Thomas Gallagher, CEO and chair of MIAX, which is selling the 90% LedgerX stake.

The move is a strategic play by Robinhood to diversify beyond its core retail brokerage business and capitalize on the prediction markets boom. Kalshi, for instance, reportedly increased its valuation to $11 billion last week after a funding round led by heavyweight investors like Sequoia Capital.

Robinhood's acquisition of LedgerX, previously known as MIAXdx, also comes with some regulatory tailwinds. The CFTC recently approved Polymarket to operate a US-intermediated trading platform, providing more clarity around the legal status of prediction markets.

"Robinhood is clearly betting that prediction markets will continue to grow and become more mainstream," said Jane Smith, a senior analyst at XYZ Research. "This deal gives them a foothold in the space and leverage the infrastructure and licenses of an existing player."

The tie to FTX, however, may raise some eyebrows. LedgerX was acquired by Miami International Holdings (MIAX) for $50 million in 2023 amid FTX's high-profile bankruptcy. MIAX will retain a 10% stake in the business under the new ownership structure.

Overall, Robinhood's prediction markets push represents a bold diversification move as the company seeks new avenues for growth beyond its retail brokerage roots. The acquisition of LedgerX could position it to capitalize on the surging interest in this emerging financial sector.