Robinhood (NASDAQ: HOOD) is investing in its own platform for the FIFA World Cup. The retail brokerage revealed today (June 4) that it will be managing tournament prediction contracts through its newly established Rothera affiliate exchange, significantly impacting the liquidity of Kalshi.

Last November, Robinhood disclosed its intentions to collaborate with market maker Susquehanna International Group to create a dedicated futures and derivatives exchange along with a clearinghouse, aiming to extend its presence in prediction markets, which the financial services company has noted as one of its rapidly expanding areas.

Rothera, which holds a license from the Commodities Futures Trading Commission (CFTC), is a product of this initiative, and the World Cup could act as a trial for the emerging prediction market.

"It’s also a major milestone for Robinhood’s prediction markets business, as we route event contracts to Rothera, a CFTC-licensed exchange and clearinghouse independently managed through Robinhood’s joint venture with Susquehanna International Group,” according to a statement.

The brokerage emphasizes that at present, it is directing "a portion" of derivatives related to Major League Baseball and the World Cup through Rothera, with intentions to "expand gradually to cover more events. "

Impact of Robinhood's World Cup Strategy on Kalshi

Although not mentioned in Robinhood's announcement, the firm's choice to transfer some World Cup trading for its clients to Rothera might influence Kalshi — the prediction market that has had a longstanding collaboration with the brokerage.

When it was revealed last November that Robinhood was working with Susquehanna, it sparked rumors that Robinhood might eventually change its alliance with Kalshi — an arrangement where both entities benefitted from the volume of event contracts the brokerage sent to the prediction market firm.

According to projections for 2025, Robinhood is estimated to have contributed between 25% and 35% of Kalshi's daily trading volume, though there is a prevailing sentiment that these figures have declined.

Nonetheless, it is evident that Robinhood has a strong motive to retain a larger share of its event contract activities internally since it processed "over 12 billion event contracts" in the previous year, and that number has increased to 16 billion for the current year. The company is also demonstrating a readiness to compete regarding fees for event contracts.

“On June 1, we introduced a new pricing model where commission fees change based on the price of the contract and the size of the order, with lower fees at the extremes (contracts priced near $0.01 and $0.99) and never exceeding $0.01 per contract,” according to the company.Robinhood Gold subscribers may receive discounts reaching 50% on these costs, which could lead to savings as high as 95% when compared to earlier pricing models.

World Cup Could Present Major Opportunities for Robinhood

With the event occurring in North America, the every-four-years World Cup might be a perfect occasion for Robinhood to utilize Rothera more extensively. Furthermore, it is expected to be significant for betting markets and sportsbooks since the betting amounts (not the prediction market activity) related to the occasion might surpass $4 billion in the United States.

“World Cup prediction markets allow customers to speculate on a variety of different game and tournament outcomes, turning their unique sports knowledge into a trading opportunity,” says the financial services firm.

Its World Cup-related products will feature contracts for events such as predicting match victors, overall scores, group champions, teams progressing from the preliminary rounds, and the recipient of the Golden Boot, among a variety of others.