Online Stock Market Trading: The Prediction Market Layer

Online stock market trading has evolved from phone-based broker calls to zero-commission mobile apps. The next layer is prediction markets, which allow users to trade on the outcome of real-world events. As we detail in our full review of the Prediction Markets presentation, Luke Lango argues that the companies building this new trading layer represent a significant investment opportunity.

The Evolution of Online Trading

Online trading went through several phases. First, the move from phone-based to internet-based trading in the 1990s. Second, the move from high commissions to low commissions in the 2000s. Third, the move to zero-commission mobile-first trading led by Robinhood in the 2010s. Fourth, the addition of crypto trading in the 2020s. Now, prediction markets represent the next category being added to online trading platforms.

Robinhood’s addition of prediction markets to its platform is the clearest signal of this evolution. The company that pioneered zero-commission stock trading is now offering prediction market contracts at $0.01 per trade. For 27 million users already comfortable trading stocks and crypto, prediction markets are simply another asset class available on the same platform. For more on Robinhood’s move, see our article on Robinhood prediction markets.

The Prediction Market Category

Prediction markets let users trade shares that pay out based on whether a predicted outcome occurs. Who will win the election? Will the Fed cut rates? Will a specific bill pass? Platforms like Kalshi and Polymarket allow users to buy shares that pay out based on outcomes. The prices of those shares reflect the collective wisdom of the market about the probability of each outcome.

Lango cites estimates suggesting the market could grow from $64 billion today to $1 trillion by 2030. Trading volume is up 400 percent in recent quarters, according to Pew Research data. In 2024, Kalshi won a landmark court battle against the CFTC, establishing legal clarity for prediction markets in the United States. For more on the category, see our article on prediction market investing.

The Infrastructure Plays

Lango’s thesis is that you profit from prediction markets by investing in the infrastructure companies, not by placing bets. Two free tickers are revealed.

Robinhood (HOOD) is the main pick. With 27 million users and a flat $0.01 per contract fee, Robinhood has both the user base and the pricing advantage to capture significant prediction market volume. The partnership with Susquehanna provides the market-making infrastructure. For more, see our article on Robinhood brokerage fees.

Coinbase (COIN) is the side bet. Polymarket runs on the Polygon network and uses USDC for settlement. Coinbase is the primary U.S. exchange for USDC and is rolling out prediction markets to its own user base. This means Coinbase is both the infrastructure layer for existing platforms and a direct competitor entering the space. For more, see our article on Polymarket stocks.

Why This Is Different From Sports Betting

Prediction markets are often compared to sports betting, but Lango argues they are fundamentally different. Sports betting is about wagering on games. Prediction markets are about trading on real-world events, including elections, economic data, and policy decisions. The prices in prediction markets serve as real-time forecasting tools that broadcasters, analysts, and campaigns use as data.

Additionally, the infrastructure approach is different. Sports betting platforms are the product. Prediction market infrastructure companies are the picks and shovels. When you invest in Robinhood or Coinbase, you are investing in companies that serve multiple categories, of which prediction markets are one growing component. For more on the broader thesis, see our article on prediction market stocks.

The Institutional Signal

Goldman Sachs has a team analyzing prediction markets and is reportedly building a prediction market trading desk. Lango suggests this could happen as soon as October 13th, though this specific date is unconfirmed. When Goldman Sachs enters a category, it signals institutional interest and adds credibility to the growth thesis.

The combination of regulatory clarity from the Kalshi court victory, 400 percent volume growth, institutional interest from Goldman Sachs, and mainstream platform adoption from Robinhood creates a structural case that prediction markets are becoming a permanent fixture in online trading. For more on the institutional angle, see our article on the Nasdaq private market.

The Investment Opportunity

Both HOOD and COIN are real, publicly traded stocks available through any brokerage. The prediction market opportunity is one component of their businesses, alongside stock trading, crypto, and other services. The investment thesis is that prediction markets represent a new, fast-growing revenue stream for companies with existing user bases and infrastructure.

For investors new to online trading, see our article on investment sites for beginners. For those concerned about platform safety, see our analysis of whether Robinhood is safe to invest in.

This is not financial advice. Always do your own research before investing.