TL;DR
The prediction market exchange Rothera, jointly invested in by Robinhood and SIG, rapidly rose to the top five globally after launch, generating an annualized revenue of approximately $150 million in its first 41 days of operation.
Goldman Sachs expects Rothera to generate $307 million in revenue by 2027, accounting for 5% of Robinhood's total revenue; by 2028, this share could rise to 6%.
Rothera's competitiveness stems from Robinhood's 14 million monthly active users, SIG's market-making capabilities, and retail fees significantly lower than those of other prediction market exchanges.
Goldman Sachs expects Robinhood's projected market revenue to reach $943 million in 2027 and $1.15 billion in 2028, exceeding market consensus by 10% and 14%, respectively.
Rothera can explain part of Robinhood’s current high valuation, but even excluding this business, the rest of Robinhood’s operations remain at historically high valuations.

Within months of launch, it rose to the top five globally.

Robinhood is evolving its predictive markets from a rapidly growing brokerage offering into a trading infrastructure under its own operational control.

Goldman Sachs highlighted Rothera in its latest report. Rothera is a prediction market exchange owned by Robinhood, Susquehanna International Group (SIG), and MIAX with equity stakes of 45%, 45%, and 10% respectively. As Robinhood is the controlling party, it consolidates Rothera’s full revenue and expenses into its financial statements, then allocates 55% of the net profit to other shareholders through non-controlling interests.

This means that all revenue generated by Rothera will be reflected in Robinhood’s revenue, but only 45% of the net profit will ultimately belong to Robinhood shareholders. Understanding this accounting relationship is key to evaluating Rothera’s actual contribution.

Caption: Robinhood consolidates all of Rothera's revenue and expenses, but only 45% of the net profit is attributable to Robinhood.

Since its launch in late May 2026, Rothera has rapidly scaled. In its first 41 days of operation, Rothera generated approximately $17 million in revenue, equivalent to an annualized revenue of about $150 million, with Goldman Sachs estimating its pre-tax profit margin has already reached 45%.

The growth in trading volume is more intuitive. Rothera completed only about 2 million contracts in May, surged to 2.09 billion in June, reached approximately 1.688 billion in July, and then declined to 593 million in August.

Rothera launched in May 2026, with contract trading volume exceeding 2 billion in June, after which it declined slightly.

By notional trading volume, Rothera became the world's third-largest designated contract market for prediction markets in July 2026, ranking fifth in August alongside leading platforms such as Kalshi, Polymarket, Crypto.com, and Opinion.

By notional trading volume, Rothera ranked as the third-largest and fifth-largest prediction market DCM globally in July and August 2026, respectively.

However, Rothera is still in its early expansion phase. Its notional trading volume share dropped from around 3% in July to about 1% in August, and its trading volume and ranking remain susceptible to sports event schedules, trending events, and market cycles. Its brief entry into the global top five demonstrates Robinhood’s traffic-driving capability, but it is not yet sufficient to confirm a stable market position.

Rothera initially offered almost exclusively sports event contracts, and only began adding political and economic products in August 2026, when each category accounted for approximately 1% of trading volume. This means Rothera’s current activity remains heavily dependent on the sports market, and product diversification has only just begun.

For Robinhood, Rothera’s significance also lies in the shift in its business model. Previously, Robinhood acted primarily as a futures commission merchant (FCM), offering clients access to prediction markets and routing orders to designated contract markets such as Kalshi and ForecastEx. Robinhood charged brokerage fees, while external exchanges charged matching and settlement fees.

After Rothera launches, Robinhood can simultaneously participate in both brokerage and exchange functions, retaining within its own ecosystem some revenue that previously flowed to external platforms. As a result, the prediction market is no longer just a trading product for retail customers, but also becomes an entry point for Robinhood’s expansion into trading infrastructure.

How do low fees leverage liquidity?

The ability of prediction markets to scale depends crucially on liquidity. Compared to stock markets, prediction markets feature a vast number of contracts across diverse topics, outcomes, and timeframes, making trading volume more easily dispersed. If there are insufficient buyers and sellers, bid-ask spreads widen, user experience deteriorates, and market activity is further diminished.

Goldman Sachs believes that Rothera has two liquidity sources that are difficult to replicate.

The first source is Robinhood's retail customers. As of the report's release, Robinhood had approximately 14 million monthly active users. As more prediction market orders are directed to Rothera, these customers can continue to provide retail traffic to the exchange.

The second source is SIG’s market-making capability. SIG is not only a leading global market maker but also holds a 45% equity stake in Rothera, giving it a strong incentive to consistently provide quotes and liquidity to the platform. Robinhood supplies retail orders, while SIG handles order execution and liquidity matching—this combination formed the foundation of Rothera’s early growth.

Lower fees are another advantage that attracts more orders to Rothera.

Goldman Sachs estimates that the majority of Rothera event contracts traded at prices between $0.25 and $0.30, or the symmetric range of $0.70 to $0.75. According to its dynamic fee model, the average retail taker fee at the exchange level is approximately 0.38%–0.42% per $1 notional contract, significantly lower than the 1.17%–1.31% range observed on other major prediction market exchanges.

Goldman Sachs estimates that Rothera offers the lowest average fees for retail traders on the primary prediction market, DCM.

Rothera does not use a flat fee structure, but rather a dynamic model tied to contract price and trader type. Fees are lower when contract prices are closer to $0 or $1, and relatively higher when prices are closer to $0.50. Professional trading firms and market makers pay higher fees than retail customers.

The purpose of this pricing structure is to reduce the cost of participation for retail customers while charging higher fees to professional institutions to support platform liquidity.

Robinhood also adjusted its prediction market fee structure after the launch of Rothera. Previously, customers paid a fixed total fee of approximately 2%; after adopting variable pricing and routing some orders to Rothera, Goldman Sachs estimates that the average total fee paid by customers has decreased to 1.31%-1.42%, equivalent to savings of about 29%-34%.

After implementing floating pricing and routing orders to Rothera, Robinhood customers are expected to pay a total fee rate reduced from 2% to 1.31%-1.42%.

For Robinhood, a reduction in customer fees does not necessarily mean a corresponding decline in platform revenue. Since the company earns both brokerage fees and fees from Rothera’s exchange, Goldman Sachs estimates that Robinhood’s gross fee rate, before non-controlling interests, could rise from approximately 1.25% to between 1.31% and 1.42%.

However, only 45% of Rothera’s net profit is attributable to Robinhood. After accounting for non-controlling interests distributed to other shareholders, Goldman Sachs estimates Robinhood’s effective predicted market fee rate to be approximately 1.11%-1.19%, slightly below the previous level of around 1.25%.

Therefore, the value of this model comes primarily from long-term scale rather than an immediate increase in effective fees. Robinhood is essentially trading some short-term revenue for lower customer costs, higher trading volume, and greater control over trading infrastructure.

Currently, only Robinhood is connected as an FCM to Rothera. If lower fees attract other brokerages to join, the exchange can gain orders outside the Robinhood ecosystem and create a cycle of “lower fees—more traffic—deeper liquidity.” However, before external brokerages大规模接入, Rothera remains heavily dependent on traffic from within Robinhood.

How much revenue could prediction markets contribute to Robinhood?

Goldman Sachs expects Rothera's revenue to grow from $87 million in 2026 to $307 million in 2027, and further to $444 million in 2028, accounting for 2%, 5%, and 6% of Robinhood's total revenue during the same periods, respectively.

During the same period, Rothera’s net profit attributable to Robinhood is expected to be $14 million, $58 million, and $94 million, respectively. As early-stage investments decline and revenue scales up, the fixed cost leverage in the exchange business is expected to unlock. Goldman Sachs believes its margins could gradually converge toward the 55%-70% range typical of mature derivatives exchanges over the long term.

Rothera is only part of Robinhood’s prediction market business. In addition to exchange revenue, the company also generates prediction market income from its brokerage side. Goldman Sachs estimates that Robinhood’s total net prediction market revenue will reach $657 million in 2026, increase to $943 million in 2027, and reach $1.15 billion in 2028, accounting for 12%, 14%, and 15% of the company’s total revenue, respectively.

Among these, Rothera’s share of Robinhood’s predicted market revenue is expected to rise from approximately 13% in 2026 to 33% in 2027, and further reach 39% in 2028. This means Rothera will gradually evolve from a supplementary revenue source for the predicted market business into a key component.

Prediction markets are also the primary reason Goldman Sachs’ revenue expectations for Robinhood exceed market consensus. Goldman Sachs’ forecasts for prediction market revenue in 2026, 2027, and 2028 are 4%, 10%, and 14% higher than market consensus, respectively, while its total revenue forecasts for the same period are 2%, 3%, and 3% higher, respectively.

Goldman Sachs expects Robinhood's projected net revenue for 2027 and 2028 to be 10% and 14% above market consensus, respectively, but the revenue advantage has not fully translated into an EPS advantage.

However, the upward revision in market revenue forecasts has not been fully reflected in earnings per share. Goldman Sachs’ adjusted EPS forecast for Robinhood in 2027 is broadly in line with market consensus, and its 2028 forecast is even about 1% below consensus. This indicates that, beyond revenue growth, allocations to non-controlling interests, product investments, and cost structure continue to impact final shareholder returns.

Rothera may potentially enter other exchange-traded products in the future. Goldman Sachs specifically mentioned perpetual futures, noting that its exchange license could create room for product diversification. However, this aspect remains closer to a potential option and is not yet suitable for inclusion in recognized revenue. Whether these products can be launched still depends on regulatory approvals, market demand, and the pace of implementation.

Maximum valuation of $19.5 billion; what is required for the optimistic scenario?

Goldman Sachs conducted a sensitivity analysis on Rothera's 2027 revenue, profits, and potential value using baseline, optimistic, and pessimistic scenarios.

Under the base case scenario, Goldman Sachs expects Rothera to generate $307 million in revenue and approximately $129 million in net profit in 2027, with approximately $580 million in net profit attributable to Robinhood. This corresponds to an overall equity value for Rothera of approximately $5.1 billion to $5.4 billion, with an attributable value to Robinhood of approximately $2.3 billion to $2.5 billion, equivalent to $2.50 to $2.69 per share.

Under the bull case, Rothera's 2027 revenue could reach $359 million to $906 million, with net income attributable to Robinhood of approximately $71 million to $195 million, corresponding to an overall equity value of $6.7 billion to $19.5 billion and Robinhood's attributable value of $3 billion to $8.8 billion, equivalent to $3.30 to $9.64 per share.

Under a bearish scenario, Rothera's 2027 revenue could range from $91 million to $242 million, with Robinhood's net profit attributable to it approximately $15 million to $44 million, corresponding to an overall equity value of $1 billion to $3.6 billion and Robinhood's attributable value of $500 million to $1.6 billion, equivalent to $0.52 to $1.76 per share.

Under different growth scenarios, Goldman Sachs estimates Rothera's total equity value to be approximately $1 billion to $19.5 billion; the value attributable to Robinhood is estimated at $500 million to $8.8 billion.

Goldman Sachs combines the total betting revenue from prediction markets and online sports betting into a single potential market, citing significant overlap between the two product categories. Its estimates show that the combined annual revenue pool is projected to reach approximately $18 billion in 2026 and could grow to $20–21 billion by 2027.

Under this market scope, Rothera’s base case corresponds to approximately 1.5% of revenue share; the optimistic case ranges from 1.7% to 4.2%; and the pessimistic case ranges from 0.5% to 1.2%.

A valuation of up to $19.5 billion implies highly aggressive growth assumptions: Rothera’s revenue must reach $906 million by 2027, a 946% year-over-year increase; Robinhood must continue to funnel substantial order flow to the platform; SIG must sustain its market-making support; additional external FCMs must join; and the product range must expand beyond sports contracts to include political, economic, and other derivatives.

This also explains why Goldman Sachs’ valuation range is so broad. Rothera’s value depends not only on predictions of overall market growth, but also on its ability to transform from an internal trading venue for Robinhood into an independent infrastructure that can attract other brokers and traders.

Rothera can also partially explain Robinhood’s current high valuation. Robinhood’s current forward P/E ratio, based on Goldman Sachs’ FY+2 forecast, is approximately 39.3x, placing it at the 87th percentile of the company’s valuation range over the past five years, indicating that the market has already priced in substantial growth expectations.

After excluding the value attributable to Rothera from Robinhood, the remaining business corresponds to a FY+2 P/E ratio of approximately 39.2–39.3x in the base case, 37.0–38.9x in the upside case, and 39.6–39.8x in the downside case.

This does not mean the rest of Robinhood’s business is cheap. Even under the base case scenario, the valuation of the remaining business is at the 87th percentile historically and significantly above the average for brokers and crypto-related companies. Goldman Sachs is willing to accept this premium primarily based on Robinhood’s projected 22% revenue growth between 2026 and 2028, as well as the company’s rapid product rollout pace.

Rothera provides new support for Robinhood’s valuation, but its investment thesis still hinges on sustained high growth. Whether trading volume can be maintained, whether external brokers will join, whether non-sports contracts can achieve scale, and whether regulators will permit further product expansion will determine where Rothera ultimately lands within the $1 billion to $19.5 billion valuation range.

What is currently clear is that prediction markets have evolved from a new product offering by Robinhood into a critical variable influencing its revenue expectations and valuation framework. Whether Rothera can convert short-term trading interest into a stable liquidity network will be key to the viability of Robinhood’s next growth narrative.

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