When prediction markets become the new gambling table: Will involvement in betting cause super apps like Robinhood to decline?

The rise of prediction markets has led financial platforms like Robinhood, Coinbase, and Gemini to successively incorporate related trading features. However, Inversion Capital CEO Santiago Santos warned that this trend is actually eroding the foundation of the financial super app (Super App).

He pointed out that although the prediction market can bring impressive income in the short term, its “casino-like” characteristics will accelerate user loss, causing the platform to lose long-term value in user retention.

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The prediction market's “gambling nature” has become a short-term highlight, while also posing a long-term risk for financial applications.

Santos emphasized that although he agrees with the core concept of the prediction market, the entry of prediction markets into financial applications is a completely different story. He pointed out that Robinhood's user base, primarily composed of retail investors, is already inclined towards speculation, and adding such gambling features will only exacerbate the risk of their capital outflow.

The longer you stay in the casino, the higher the probability of losing all your chips. Losing all your chips means you are completely out of the game, and at this point, the user's value is zero.

He stated plainly that the expansion of financial products is not without principles and should still consider whether “it should be done,” and the prediction market is indeed a high-risk service that will enhance volatility and weaken user stability.

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Successful super financial App: Expansion is secondary, reducing user churn is key.

The article points out that the core of super applications is not traffic, but rather “sustainable retention.” The addition of prediction markets may increase revenue in the short term, but in the long run, it will damage unit economics, increase customer service burdens, and compliance costs.

Santos compared Nubank with Goldman Sachs' digital account case, Marcus, pointing out that the former succeeded due to its strong correlation with credit cards, insurance, and savings products related to its original Nubank business; the latter, however, declared failure due to the conflict between the highly volatile consumer finance business and its investment banking culture.

Therefore, super financial apps like Robinhood venturing into gambling seem more like a distraction ( than a related business ).

He emphasized that the reason for the decline of sustainable enterprises is their distraction from products.

Blockchain reduces the cost of the financial system, but “wrong products” can still ruin everything.

Santos stated that blockchain has indeed significantly reduced the costs of financial infrastructure such as settlement and ledger maintenance, making the imagination of super financial apps feasible. However, there are still certain higher existing costs, including compliance and fiat channels for upstream and downstream.

Therefore, any erroneous product that leads to fluctuations or loss of user structure will impose a burden on the overall operating costs, and the prediction market is one of them: “Integrated, it seems cheap, but the hidden costs are actually expensive.”

Santos's final advice: return to what the financial platform is really meant to do.

Santos finally emphasized: “The 'casino-style value extraction' is not the future of financial platforms; meeting users' financial needs is.”

Products like Robinhood succeed because they are simpler and easier to use than existing players, and they are more digitally native. However, users will grow older, and over time, the real opportunity is to grow alongside them and be closer to their financial lives, rather than extracting value under speculative trends.

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This article discusses whether the prediction market will become the new gambling table in finance: Will forays into betting cause super apps like Robinhood to fall? Originally appeared in Chain News ABMedia.