00:00Prediction Markets revenues, as I mentioned, now bigger than that from stock trading.
00:04The business did not exist just a few quarters ago.
00:07When does it overtake crypto revenues?
00:09And that's a good point. It's a very new business for us.
00:13It's nascent as an asset class.
00:16Prediction Markets really entered the mainstream in the 2024 election,
00:20which is when we launched our offering.
00:23And I think we're just at the beginnings of this new asset class.
00:28Does it become the biggest business?
00:30Well, I don't really think about it that way.
00:33So Robinhood is a financial super app.
00:36We're striving to serve all of our customers' financial needs across every asset class
00:41and every financial transaction worldwide.
00:43So I think there's plenty more room to run,
00:47but there's also plenty of room to run in our other business lines.
00:52We have 11 lines of business generating $100 million in revenue or more per year
00:57with plenty more on deck.
00:59Well, and we're going to get to more on crypto,
01:02but I do want to stick with Prediction Markets for a second
01:04because it's kind of like what everybody is talking about right now.
01:07It's a big part of our, in fact, it's a big part of Bloomberg Crypto now.
01:11How much is sports-related on the platform?
01:14Because our Bloomberg Intelligence team does an analysis of Kalshi, for example.
01:18They say 80% to 90% roughly of the activity on Kalshi is sports-related.
01:23How much of that is sports-related on Robinhood?
01:25Yeah, it's a big chunk of it for sure.
01:27But we are seeing non-sports contracts continuing to gain share.
01:36And sports is just easily understandable, right?
01:40You're seeing prediction markets being a disruptor
01:44and an alternative to traditional sports books.
01:48And there's already an established behavior there, whereas general event trading is a little bit newer.
01:55It's harder for some customers to wrap their heads around.
01:58We do a lot to educate customers on that.
02:02But we see it growing.
02:04And in fact, as the product matures, we see a world where actually non-sports eventually overtakes sports.
02:12I'm still going to stick with prediction markets.
02:14It's just too interesting.
02:15So is Robinhood, you're partnering right now on infrastructure,
02:18but is the goal for Robinhood to have its own integrated prediction market exchange and clearing system?
02:24We did announce a joint venture with Susquehanna, which is one of the leading market makers, to launch Rothera.
02:31So we acquired LedgerX, if you're familiar, which is a long-established futures, DCM and DCO.
02:40And that actually is going to go live this quarter.
02:44So for a while, we've been partnering with third parties to provide the exchange and clearing infrastructure.
02:49But now we have a vertically integrated stack later this quarter.
02:54So what role would Kyle should play in Robinhood's ecosystem once you fully launch that one?
02:59They would be an alternative exchange provider, along with ForecastX.
03:04And who knows, we might also integrate with more exchanges.
03:08Really what we're looking for is how do we give customers choice and flexibility
03:12and give them the best pricing and the best access to contract selection.
03:17Any names in your list other than Kalshi that you're looking to tap?
03:21I mean, I think we've had conversations with all of the players.
03:26And I should also say on the Rothera side, a lot of people are interested in coming to Rothera as
03:33well
03:33because they know Robinhood brings a lot of distribution, a lot of usage.
03:38So we've been hearing from, you know, folks that want to integrate with Rothera at launch.
03:44And they see the combination of Robinhood and SIG as a very, very strong one to bring liquidity into the
03:51market.
03:52You know, I've spoken quite a bit about prediction markets with other CEOs.
03:56Rick Worcester of Schwab, for example.
03:58They don't offer prediction markets right now.
03:59And he's told me that when and if they do offer, they don't want to offer sports because he sees
04:05that as gambling.
04:07And he doesn't see that as being aligned with his own financial services and what he's doing at his firm.
04:13What would you say to critics who say, well, maybe we understand prediction markets and event-based contracts
04:18on the economy and certain other parts, maybe oil prices.
04:23But we don't see sports fitting into financial services.
04:26What would you say to those critics?
04:27I mean, I think the reality of it is sports is a big part of the economy.
04:33A lot of money is spent in sports, an increasing amount.
04:36And I think in particular with the potential automation that we see happening from AI,
04:42sports is one of those things that is continuing to be human.
04:47And you don't really want to watch self-driving cars circling a track.
04:51It's less entertaining.
04:53So I think sports is actually big business and it's a critical part of the economy,
04:58much more so than even 20 years ago.
05:01When you look at these franchises catching, you know, 10 billion plus valuations,
05:08it's increasingly global.
05:10So the two worlds are starting to converge.
05:13And, yeah, I think this new asset class is going to continue to grow and develop.
05:21And I think, you know, a lot of competitors historically, you saw this with crypto, right?
05:27They sort of dismiss the asset class.
05:30And then eventually you'll hear the story shifting to, okay, well, yeah, we'll offer it, but only in these ways.
05:38And then eventually the story becomes, well, you know, overwhelming demand from our customers.
05:46And now we're offering it and we have to compete with, you know, where our customers are going.
05:53So I'd imagine it's the same thing.
05:56And it's hard for the incumbents to build and launch new stuff.
06:00So at first, while they're trying to figure out how to build it,
06:03they tend to take on a more defensive posture sometimes.
06:06I wish we could talk prediction markets, but I have to ask you about Trump accounts.
06:10Can you explain briefly and maybe succinctly, because we have a ton more questions,
06:15how are you working with BNY and Treasury?
06:17What exactly is Robinhood doing versus BNY versus Treasury to administer Trump accounts?
06:23Yeah, sure.
06:23So Trump accounts, for those that might not be familiar,
06:26it's a brokerage account from birth for every newborn seeded with $1,000 by the Treasury.
06:34And Robinhood was chosen in partnership with BNY.
06:38Robinhood is going to be the sole initial trustee and broker for the Trump accounts,
06:43which means we're not only designing and building the Trump accounts app,
06:49which the aspiration will be is it's going to be the best product that the government's ever been associated with.
06:55That's what we hope for and what we're building with with the National Design Studio.
06:59But we're also the broker.
07:01So the accounts and the assets are going to be custodied, custody with us.
07:06And BNY, the storied oldest bank in the U.S.,
07:10is serving as financial agent and national infrastructure manager.
07:14Would parents be able to roll over those funds to another brokerage?
07:18Yeah, eventually there will be rollovers.
07:21So you'll be able to do the accounts to the brokerage of your choice.
07:25There's no firm date on that.
07:27Everyone's eyes are on the July 4th launch and just making sure that the Trump accounts app
07:33and the initial experience is just really top notch.
07:38You've flagged some significant costs in relation to this program.
07:41Can you explain how the benefits outweigh the cost of this?
07:45Yeah.
07:45So there was a lot of confusion on this.
07:47I'm glad that I have a chance to address it.
07:50So we announced at earnings that there's going to be $100 million cost with developing the Trump accounts.
07:55So not all of that has been incurred already, but that's what we anticipate it will be.
08:01And it will be profitable for us.
08:03So we're serving as a government subcontractor, and it's on a cost-plus basis.
08:09So we're kind of billing for the costs.
08:11And really, the cost comes from the fact that the U.S. government wants these accounts and the service to
08:19be handled really, really well by humans, right?
08:22So we have to staff up significant servicing because, you know, there's 5.5 million children that have signed up
08:29already.
08:29There's 70 million children under the age of 18 in this country.
08:33So we've got to be ready to scale up to tens of millions of accounts relatively quickly with, like, top
08:39-notch support and reliability.
08:41Hey, Vlad, one more before we go.
08:43Coinbase today cutting 14% of staff.
08:45It cites volatile markets, AI, PayPal, Block, Crypto.com.
08:49They've had layoffs.
08:50What does that say to you about the industry right now?
08:54I mean, I don't know what is going on in the internals of other companies.
09:00I think that...
09:02Is it AI-related or is it crypto-related?
09:05I'm not sure.
09:06Maybe it's a combination of both.
09:09I think the timing, of course, is notable right in the thicks of earnings season.
09:15But I can't really share more than that.
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