Finance platforms racing so as to add prediction markets are doing so at the price of accelerated “casino-like” consumer churn, says enterprise capital agency Inversion Capital founder and CEO, Santiago Roel Santos.
Santos argued in a weblog submit on Saturday that whereas he’s a “believer within the underlying thought” of prediction markets, he thinks providing them in mainstream finance apps like Robinhood threatens future worth seize by rising the chance of consumer account liquidation.
“The issue with casino-like merchandise isn’t that customers lose cash. It’s that casinos speed up churn,” he stated.
“The longer you exist inside a on line casino, the upper the chance of liquidation. And liquidation means you’re out of the sport solely. A churned consumer is value zero.”
Robinhood has been ramping up its deal with prediction markets over 2025, and crypto firms Coinbase and Gemini are additionally quickly set to supply related merchandise that permit customers to wager on occasions like sports activities and politics.
Santos stated such choices put an excessive amount of deal with an space that may finally affect the app’s fundamental use case; providing straightforward to make use of monetary companies to retail purchasers.
“Merchandise like Robinhood succeed initially as a result of they’re less complicated, extra accessible, and extra digitally native than incumbents,” he stated.
“However customers age. Over time, the actual alternative is to develop with them and seize extra of their monetary lives, to not maximize extraction for the time being of peak hypothesis,” he added. “If sturdiness issues, you optimize for endurance.”
Blockchain-based prediction markets surged in adoption amid the US elections in 2024, with Robinhood initially leaping on the bandwagon again in March through a partnership with Kalshi.
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Crypto trade Coinbase introduced on Wednesday that it was including prediction markets as a part of its “every thing app” push in partnership with Kalshi, whereas an affiliate of Gemini received a US license to supply occasion contracts.
Santos finally thinks that whereas prediction markets will look good on the stability sheet within the short-term, they are going to later look way more fragile for monetary apps as they are going to introduce a big quantity of threat that would destabilize customers.
“Monetary superapps that deal with churn as a first-class threat will find yourself with stronger moats and higher long-term outcomes,” he argued, including:
“If I have been within the seat, I’d prioritize merchandise customers naturally need as they mature financially: bank cards, insurance coverage, financial savings autos. These are boring. The info means that’s exactly why they work. They’re adjoining to the core relationship of managing family liquidity.”
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