What Q3 Earnings Season Told Us About Prediction Markets

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This piece was written and researched by Omar El Safy and edited by Pet Berisha.

DraftKings ($DKNG ( ▼ 2.65% )) expect to spend between $650M and $700M on prediction markets in 2026, and told shareholders in their Q3 2026 results that the product will bring in almost no revenue this year.

Prediction markets traded $194.1B in notional volume in Q3 2026, the biggest quarter ever.

If you haven't read our Q3 2026 report yet, you should. It’s the most comprehensive Prediction Market report ever.

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Elsewhere, Cboe ($CBOE ( ▼ 0.08% )) got the approvals from the SEC (Securities and Exchange Commission) to launch contracts on company metrics in November 2026, and Nasdaq ($NDAQ ( ▼ 0.94% )) signed Kalshi as a surveillance client.

CME ($CME ( ▼ 0.12% )) and Interactive Brokers ($IBKR ( ▼ 1.41% )) mentioned prediction markets without any figures attached.

And Rush Street ($RSI ( ▼ 3.6% )) did not mention them at all, despite applying to the CFTC (Commodity Futures Trading Commission, the US regulator for these markets) to run an exchange and a clearing house.

Sportradar ($SRAD ( ▼ 2.35% )) widened their Polymarket partnership to more than 20 leagues and competitions, and Genius Sports ($GENI ( ▼ 4.39% )) partnered with both Polymarket and Kalshi.

MIAX ($MIAX ( ▼ 2.14% )) still own 10% of Rothera, and Virtu ($VIRT ( ▲ 0.17% )) disclosed a South Carolina lawsuit claiming prediction-market contracts break state gaming law.

A US prediction-market trade can pass through up to three businesses, and each can be a different company taking a cut.

Kalshi run all three, with their own app, exchange and clearing house, so a customer who trades on Kalshi's app deals with one company from start to finish.

Robinhood earned about 1.05¢ for every contract their customers traded in Q3 2026.

Kalshi, the biggest exchange, charged about 0.71¢ a contract, or about $1.01B in estimated fees in total, before promotions and rebates to market makers (the trading firms that are always ready to buy or sell). Robinhood do not say how they count contracts, so the comparison is approximate.

Robinhood made $173M from prediction markets in Q3 2026, up 11% QoqQ, from 16.4B contracts traded, up 21% QoQ.

Robinhood already earned more from prediction markets than from stocks or crypto in Q2 2026.

They also said Rothera, the exchange they own with Susquehanna, the trading firm, passed $100M of annualised revenue in its first full quarter.

Coinbase said their prediction-market revenue passed a $200M annualised run-rate (the latest period's revenue scaled up to a full year) in Q3 2026, up from over $100M in Q2.

That works out to more than $50M in the quarter, and going by Coinbase's own growth rates, it is up about 61% QoQ. Daily prediction-market traders on Coinbase rose more than 60% QoQ, too.

So Robinhood earn at most 3.5x what Coinbase do from prediction markets (for now).

Coinbase's figure is a floor, so the real gap can only be smaller.

Both brokers pay an exchange on every trade they send to it, and Coinbase's prediction trades run on Kalshi.

The line in Coinbase's accounts that holds those payments rose to $45.0M in Q3 2026 from $9.6M a year earlier, an increase of about $35M, which Coinbase's quarterly filing says was "largely due to exchange fees" on prediction markets.

DraftKings' sales and marketing rose 68% to $606M in Q3 2026, and their adjusted EBITDA (operating profit before interest, tax, depreciation and one-off items) fell to a loss of $317M, an increase from a $126M loss a year earlier.

For the full year, they expect Predictions to cost them $650M–$700M of adjusted EBITDA, compared to the $875M–$925M they expect the rest of the business to make. Both DraftKings and Flutter posted losses in Q2 2026 as well.

DraftKings said Predictions revenue will be "immaterial in fiscal year 2026, as new customer promotions will offset the lion's share of gross revenue generated." More than 1.6M customers have used DraftKings Predictions so far this year.

Flutter's US adjusted EBITDA fell 94% to $3M in Q3 2026, which Flutter put down to their prediction-market spending and their launch in Alberta. They expect a prediction-market loss of about $200M for 2026, and they said FanDuel Predicts revenue was not material in the quarter.

FanDuel Predicts had 66,000 average monthly players in Q3 2026, up 39% on Q2, and $119M of volume by Flutter's own measure, up 102%. Flutter measure volume their own way, so it does not compare directly with the notional volume of any exchange.

Card deposits into Kalshi tripled between Q1 and Q3 2026, while deposits into every big sportsbook fell, according to data from American Spend. Kalshi and Polymarket US now take 11% of card deposits into the eight apps we tracked, up from 3% in Q1 2026.

According to data from American Spend, 88% of Kalshi's card depositors in Q3 2026, ~7 in 8, did not deposit by card into DraftKings, FanDuel, BetMGM or Hard Rock Bet.

And the 11 states without legal sports betting, home to a third of US adults, accounted for 55% of Kalshi's card deposits in September 2026.

DraftKings expect $650M–$750M of Predictions revenue in 2027 in their guidance, with spending falling to $250M–$350M. Neither Robinhood nor Coinbase break out what they spend to win prediction-market customers.

Flutter said they are "beginning to see an impact on our overall media costs as prediction market operators increase marketing spend," while the effect on their existing betting customers has been limited.

Kalshi accounted for 73% of all prediction-market volume in Q3 2026, and nine challenger exchanges took 6.8% between them.

Three of those, Novig, an independent sports exchange, DraftKings' DKeX and Underdog's UDX, went from almost nothing in Q2 to $5.1B of notional volume in Q3.

Robinhood, DraftKings and Coinbase now own, or are building, the exchange or clearing house their customers trade through.

Rothera, Robinhood's exchange, saw $3.44B of notional volume in Q3 2026, up from $2.09B in Q2.

Robinhood still send trades to three other exchanges as well, so Rothera only handles part of their customers' trades. DraftKings' own exchange, DKeX, went from almost nothing in Q2 to $1.91B, and it clears through Bitnomial, an outside clearing house.

Coinbase still send their trades to Kalshi's exchange, which saw $141.9B in Q3 2026, and the line in Coinbase's accounts that holds their exchange fees rose by about $35M in the same quarter.

Their own clearing house got its CFTC licence in late September 2026, and Coinbase said they are "building toward USDC-native, in-house clearing." USDC is a dollar-backed stablecoin.

FanDuel own the least of the four, with contracts that trade on CME's exchange and clear through CME and CDNA, Crypto.com's exchange. The broker they are setting up is a joint venture that CME will own 51% of.

CME's event contracts saw $0.24B in Q3 2026, flat on Q2, and CDNA saw $3.75B, 2.6x Q2, a figure that includes trades from DraftKings, FanDuel and Robinhood customers.

So, are prediction markets a good business?

Robinhood made $173M from them in Q3 2026 and Coinbase more than $50M. DraftKings expect to spend $650M–$700M on them this year and Flutter expect to lose about $200M, and DraftKings' own guidance puts their first meaningful Predictions revenue in 2027.

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