The law firm failed to complete its merger with rival Willkie Farr & Gallagher following failed negotiations this month.
SUCCESS
Zillow warns homebuyers on housing costs, mortgage rate change
As mortgage rates remain stubbornly high, real estate technology company Zillow issues a warning for homebuyers about the hidden costs of homeownership.
“Buying a home comes with a price tag, but keeping that home comes with a second one,” wrote Zillow.
Beyond the principal mortgage, other expenses of homeownership — such as routine maintenance, property taxes, and insurance policies — now total $16,566 annually across the country, tacking on roughly $1,380 each month, according to a new analysis from Zillow.
“Many households focus so much on winning the home and underestimate what it costs to live in it,” said Zillow Senior Economist Kara Ng. “Long after they receive the keys, insurance, taxes and upkeep are recurring expenses to plan for.”
“Since these homeownership costs vary so much by market, home shoppers should run the numbers and understand what they can truly afford before they make an offer.”
Freddie Mac reports weekly 30-year fixed-rate mortgage is 7.32%
The cost of maintenance, property taxes and home insurance are particularly difficult to navigate for many people considering current mortgage rates.
On Oct. 22, the weekly 30-year fixed-rate mortgage clocked in at 7.32%, which is still painfully high, but down from Oct. 15 when it averaged 7.40%, according to Freddie Mac.
“The average 30-year fixed-rate mortgage declined this week, offering some relief to prospective homebuyers,” said Sam Khater, Freddie Mac’s chief economist.
On Oct. 28, the daily FRM was 7.35%, according to Mortgage News Daily (MND). Even with the recent uptick, 30-year fixed mortgage rates sit just 5 basis points higher than last week’s 7.30% trough and are up a mere 0.02% from yesterday’s 7.33% reading.
“Today’s Fed announcement had no impact on mortgage rate movement, and minimal impact on intraday bond market volatility,” wrote MND’s Matthew Graham. “Well before the Fed announcement, the bond market was already slightly weaker compared to yesterday’s latest levels.”
“As a result, the average mortgage lender set rates just a hair higher,” Graham added. “Recent upward pressure is a factor of improvement in investor sentiment surrounding the tech sector.”
Zillow explains hidden homeownership cost trends
For the typical U.S. homeowner, additional expenses break down into $11,171 for annual maintenance, $3,129 for property taxes, and $2,266 for homeowners insurance, according to Zillow.
“Over the past five years, homeowners insurance premiums have jumped 54%, maintenance costs have risen 32%, and property taxes have gone up 19%,” Zillow reported. “But the pace is cooling. Overall, the cost of owning a home rose just 3% in the past year, compared with 32% over five years.”
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Of all the three main costs, maintenance is showing the clearest slowdown.
“Yearly increases in maintenance costs have shrunk every year, from 9% in 2022 to 1% in 2026,” Zillow wrote.
“Insurance may be following the same path. Federal data shows insurance premiums rose just 0.3% between February and June 2026, though they remain well above where they were five years ago.”
Amid fluctuating mortgage rates, Zillow is warning prospective homebuyers not to overlook hidden homeownership costs.NurPhoto / Getty Images
Homeowner costs vary by region
A small number of major metropolitan areas have seen the steepest increases in costs.
Across 19 of the 30 metropolitan areas analyzed by Zillow, insurance premiums have surged by at least 50% over the past five years — with Dallas (+75%), Tampa (+71%), Denver (+70%), and Houston (+69%) recording the steepest climbs.
Miami tops the nation in sheer cost at nearly $5,000 annually, followed by five other markets — Dallas, Houston, Tampa, Orlando, and Denver — where yearly premiums now exceed $3,000.
In Houston, Phoenix, Denver, and Nashville, annual insurance bills have even outpaced property taxes, a trend largely fueled by severe weather events such as damaging winds, tornadoes, and hail in vulnerable regions like Dallas and Denver.
“Maintenance remains the largest hidden cost everywhere, at roughly two-thirds of the national total, and tops $12,000 in six major metros, including Seattle ($12,594) and Boston ($12,486),” Zillow wrote.
“Los Angeles experienced the sharpest surge in maintenance expenses, jumping 27% year over year,” the real estate technology company added.
“This steep rise reflects a mix of regional factors, including wildfire-related recovery efforts, heightened demand for home services, and persistently elevated labor costs.”
Related: Zillow predicts major mortgage rate, housing market change
Trick or Treat? Index Funds Beat Their Benchmarks More Often Than Active Funds Over the Past Decade
Morningstar recently launched some new data points that slice active and passive funds into finer cuts. Formerly, any active fund—whether it was run by a swashbuckling portfolio manager or driven by quantitative factors—got the “active” tag, while the different flavors of passive funds were all labeled “index.” Now there are some new data points that bring out the shades of gray. They are:Data pointDefinitionActive – DiscretionaryStrategies where qualitative judgment, fundamental research, or subjective decision-making by the advisor or portfolio managers is central to portfolio construction, even if supported by quantitative tools.Active – SystematicStrategies that don’t track an index but are primarily driven by models, rules, or quantitative frameworks for security selection and weighting, with limited or secondary human discretion.Active – OtherStrategies where nontraditional mechanics (such as options overlays, targeted leverage, inverse exposure, or long/short structures) are the primary drivers of returns and are not subordinate to discretionary or systematic stock/bond selection.Passive – Index TrackingStrategies that seek to replicate or track the total return of a specific index, following index composition with minimal active oversight.Passive – OtherStrategies designed to track or replicate single-asset exposures, commodities, or leveraged/inverse structures—often where the reference asset or index is composed of nontraditional securities and/or exposure is achieved synthetically through derivatives.(For a more complete and insightful breakdown, see my colleague Dan Sotiroff’s recent article here.)Though these data points aren’t available to Morningstar.com users just yet (they’re being launched initially in our institutional research product, Morningstar Direct), I’ve been playing around with them and think they impart some useful lessons. Lesson 1: Cost Is a Spectrum, Not a Bright LineIt was probably already obvious to some of you, but there’s always been a range of fees among active and passive funds. Indeed, there are some cut-rate actives as well as some nosebleed-expensive index funds, and vice versa. The new data points bring that into sharper relief. Here are the average fees of active US stock funds based on their Morningstar Category as well as their active/passive classification. (For purposes of this analysis, I’m going to exclude the two “Other” active/passive strategy types, as they’re home to relatively few funds.)Here is the same thing, but this time it’s the asset-weighted average expense ratio by peer group and active/passive classification.In general, the average active-systematic fund was cheaper than the average active-discretionary fund, and that difference was even more pronounced when weighted by net assets.How about passive funds? To really bring out the cost differences among those funds, I’ve used the new “Passive-Index Tracking” data point together with our existing “Strategic Beta” tag (our term for what some in the industry self-servingly calls “smart beta”).Now for the same thing, but this time, weighted by net assets:These charts are a little harder to suss out, but long story short, the average non-strategic-beta index-tracking fund tended to be cheaper than the average strategic-beta index-tracking fund in the blend categories but not the others. Why? Most of the index-tracking funds in the value and growth categories are classified as “strategic beta,” including the biggest and cheapest value and growth funds like Vanguard Value Index and iShares Russell 1000 Growth. Since the category-by-category analysis can be a little noisy, here’s the breakdown for all US equity funds, irrespective of peer group. I’ve derived the average fee for each cohort on both an equal-weighted and asset-weighted basis.What you find, not too surprisingly, is that discretionary active funds cost the most, on average, but it steps down from there, with the average active systematic fund charging markedly less and an even steeper drop-off as you get to the average strategic beta and traditional cap-weighted index-tracking funds. Weighted by assets, the average index-tracking, non-strategic-beta fund recently cost (0.05%) about one-twelfth as much as the average active-discretionary fund (0.59%). Lesson 2: Lower Costs, Better Odds of SuccessThe average cost differences aren’t necessarily a revelation, but the impact becomes even more apparent when you tally up average success rates and excess returns by active/strategy fund type. For this one, I’m going to skip the Morningstar Categories and present the aggregate average results for each grouping: Here are the trailing one-, three-, five-, and 10-year success rates (which I defined as the percentage of active funds that had beaten their style-specific index) for each group as of Sept. 30, 2026.The cheaper groupings—starting with active-systematic—were likelier to outperform over most of these periods than the priciest, active—discretionary. That was even true of the staidest of the staid: index-tracking nonstrategic beta, where funds succeeded more often against the benchmarks than the funds paid to do so, active-discretionary.How could that be? It boils down to index differences: The index-tracking funds might follow a bogy that topped the benchmarks I used to derive each fund’s excess return. For instance, over the 10 years ended Sept. 30, 2026, the S&P 500 gained 15.33% per year, while the Russell 1000 rose 15.05% annually. As such, an S&P 500-tracking fund likely outperformed the Russell index, provided its fees were low and it tracked well. And so forth. I also calculated the groupings’ average excess returns versus their indexes. Here’s how that looked over the decade ended Sept. 30, 2026.Keep in mind that these figures (and the success rates above them) do not reflect the results of dead funds and, thus, are survivorship-biased higher. But because there are far more active funds than passive funds, and given active funds are less likely to survive longer periods than index-trackers, that bias inflates the active-discretionary grouping’s results the most. Notwithstanding that, the same basic trend holds: The cheaper groupings fared better, or at least lagged to a lesser degree, on average than active-discretionary funds. On the bright side for active, note that cheaper active-systematic funds did best of all, underscoring the degree to which lower fees can bend the odds in one’s favor, albeit not enough to generate a positive average annual excess return over this time frame on an equal-weighted basis.Lesson 3: Active Doesn’t Win on Risk, EitherOne argument active-fund proponents make is that active managers can do a better job of avoiding downside and managing risk than a fund tethered to a cap-weighted index can. Formerly, we’d have evaluated this as a binary: all the actives versus all the passives. But with the new data points, we can measure differences across the range of strategies. To that end, I started with the most obvious difference between funds in these groups: the degree to which they deviated from an index, that is, tracking error. As one would expect, active-discretionary funds exhibited the highest tracking error over the 10 years ended Sept. 30, 2026, followed by active-systematic and strategic beta funds (which were similar), and finally by cap-weighted index trackers.Next, I turned to volatility, measuring differences in the average standard deviation of these funds’ monthly returns over the 10 years ended Sept. 30, 2026.All told, active funds—both discretionary and systematic—were slightly more volatile, on average, than index-tracking funds over the decade. Moreover, when I compared the groups based on their maximum drawdown over this period, I found that the average maximum peak-to-trough downturn was slightly shallower for the index-tracking funds than it was for the two flavors of active funds.To bring things together, I calculated the average difference between each grouping’s aggregate Sortino ratio and the ratio of their style-appropriate benchmarks. (A Sortino ratio is similar to a Sharpe ratio; it divides a security’s excess return versus the risk-free rate by the volatility of its returns, but the Sortino ratio plugs in downside standard deviation only.)In summary, the cheaper the grouping, the better its risk-adjusted returns when compared with a relevant benchmark, with nonstrategic index-tracking funds coming out ahead. TakeawaysThis is an admittedly basic analysis: It’s limited to trailing periods as of Sept. 30, 2026, excludes dead funds, and doesn’t consider every possible dimension of risk and return. Nonetheless, there are a few things we can take away:The fund universe is kaleidoscopic, and it’s therefore worth distinguishing between otherwise ostensibly similar funds. For instance, we saw that the average cost and outcomes of active funds varied depending on whether they were fully discretionary or quantitatively driven. The new data points help to highlight those differences.Those distinctions could make the difference between a good fit and a mismatch. Suppose you wanted the wide diversification of an index fund but weren’t sold on a purely cap-weighted indexing approach. In such a scenario, it could make sense to look at cheap active-systematic or strategic beta funds, which tend to strike a balance between pure indexing and full-blown active investing. A binary—active and passive—won’t convey that.Differences aside, there’s no escaping the primacy of cost. The cheaper a grouping was, the better its odds of success were. If you’re a devotee of one type of investing or another, that’s fine. But it’s still worth keeping this relationship front of mind. Start with cost, work your way from there.The juice sometimes isn’t going to be worth the squeeze. The active/strategy groupings arguably double as a complexity map. The least simple approach, by its nature, is active-discretionary. Why so? Agency risk, that is, human beings steer those strategies and so their imperatives, incentives, and tics become yours in a sense. Sometimes that will work in your favor, but it’s almost unquestionable they’ll take more work to research and monitor. It’s at least worth considering, especially if there are other comparable strategies that might be less complicated, if still entailing their own trade-offs.Switched OnHere are other things I’m reading and listening to:Trying to figure out how much you’re paying for that semiliquid fund that invests in other funds? Good luck with that“What if this is the worst time to retire?” with Christine Benz and Ben CarlsonDave Nadig with a good explainer on “perpetual futures” and ETFsETFs are kicking the bucket sooner (via Eric Balchunas at Bloomberg, via Andre Yapp)“Exponential Wealth: Centuries of Stock and Bond Returns” by Roger IbbotsonDwarkesh Patel on why the frontier labs need to release all their models, including the dangerous ones (h/t Kunal Kapoor)Phoebe Bridgers “Lost Weekend” (which has grown on me)Don’t Be a StrangerI love hearing from you. Have some feedback? An angle for an article? Email me at jeffrey.ptak@morningstar.com. If you’re so inclined, you can also follow me on Twitter/X at @syouth1, and I do some odds-and-ends writing on a Substack called Basis Pointing.
Fortinet’s stock is taking a dive after earnings. Here’s why.
Cybersecurity stocks are broadly falling as growth slows significantly in one of Fortinet’s business segments.
Nvidia’s $3 billion Meta bet reveals a 30-fold shift
Nvidia (NVDA) is putting $3 billion into Meta Platforms (META). But the size of that check may be less important than what it says about Nvidia itself.
The chipmaker bought $42.4 billion of equity securities during the first half of its fiscal 2027, up from just $1.25 billion a year earlier. That is more than a 30-fold increase.
Nvidia’s July 26 regulatory filing showed $99 billion in equity investments and $25 billion in commitments. Nvidia said it intends those investments to expand growth opportunities, cultivate its ecosystem, and strengthen its competitive position.
This development means that the Meta deal is a component of a much bigger change.
Nvidia sold more powerful graphics processor chips to establish its supremacy in AI. Nvidia is now utilizing the exceptional income generated from those sales to fund the businesses, infrastructure, and suppliers that could ultimately define the size of the AI industry.
To put it another way, Nvidia is no longer only offering the picks and shovels of the AI boom.
It is contributing increasingly to the financing of the gold rush.
Nvidia puts $3 billion behind a major customer
The Muse family of models and Meta’s artificial intelligence helper are being developed further, according to Nvidia and Meta.
According to Reuters, Nvidia will contribute $3 billion to Meta’s share offering as part of that deal.
The investment is only one aspect of the relationship.
For its next generation of AI agents, Meta intends to increase the use of Nvidia’s Vera Rubin systems and Vera central processing units. Additionally, it will make use of BlueField-4 technology and Spectrum-X Ethernet networking from Nvidia.
Also read: AI chips are getting so hot, diamonds may be the answer
Nvidia said the companies will work together to improve the performance and cost of training and running Meta’s Muse models.
As a result, an odd bond is formed. At the same time that Meta is increasing its usage of Nvidia technology, Nvidia is investing in Meta.
For Nvidia, the $3 billion investment is doable. In the most recent quarter, the company’s net income was $59.7 billion.
This has more strategic relevance.
In addition to generating up to $97.5 billion via a mix of stock issues and a planned future share-sale program, Meta is in the midst of a massive AI infrastructure buildout.
Reuters reports that Nvidia, Broadcom (AVGO), and Advanced Micro Devices (AMD) have shown interest in investing up to $5 billion in Meta’s Class A shares, including Nvidia’s $3 billion pledge.
In the end, Nvidia may be able to meet the demand for the infrastructure it supplies by helping Meta fund that growth.
Nvidia’s $3 billion Meta bet reveals a much bigger shift.Sean Gallup / Getty Images
Nvidia is building an investment portfolio around AI demand
Meta is by no means the only business that receives funding from Nvidia. In January, Nvidia invested $2 billion in CoreWeave (CRWV) as the cloud provider works toward building more than 5 gigawatts of AI data-center capacity by 2030.
Nvidia’s infrastructure is a major component of CoreWeave.
Nvidia followed that with a $2 billion investment in Nebius Group (NBIS) in March.
By the end of 2030, Nebius intends to implement over 5 gigawatts of Nvidia-based AI infrastructure.
Additionally, Nvidia has contributed $2 billion to both Lumentum (LITE) and Coherent (COHR).
These businesses provide the optical technology required to transfer massive volumes of data between processors and servers in AI data centers.
The pattern is important.
CoreWeave and Nebius may expand the infrastructure using Nvidia processors. Lumentum and Coherent can expand the technologies available to link such infrastructure. Meta is able to develop AI services and solutions that call for ever-more-powerful computing.
Nvidia is at the center of all this.
This strategy provides the business with more leverage to increase demand for AI: funding.
Nvidia can afford to finance its own ecosystem
Few companies could pursue this strategy at Nvidia’s scale. Nvidia reported $96.2 billion in second-quarter revenue, up 106% from a year earlier. Data center revenue reached $89 billion, up 117%. Net income was $59.7 billion.
Nvidia also generated $74.4 billion of operating cash flow during the first six months of fiscal 2027.
Nvidia had $42.8 billion in marketable stock securities and $56.6 billion in cash, cash equivalents, and marketable debt securities at the end of July.
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The equities portfolio has expanded quickly. At the end of January, marketable equity securities were worth barely $12.9 billion.
Nvidia continues to provide stockholders enormous financial returns. Despite a sharp rise in investment activities, it spent $39.8 billion repurchasing shares in the first half of fiscal 2027.
For investors, that combination is important.
Currently, Nvidia does not have to decide between investing in businesses throughout the AI ecosystem and repurchasing its shares.
It can accomplish both thanks to its cash generation.
Nvidia’s strategy also creates a new risk
There’s a catch.
When a chip provider invests in companies that purchase its chips, it blurs the lines between organic demand and ecosystem finance.
Investor worries around so-called circular funding in the AI sector have already been heightened by these developments.
The fact that Nvidia’s investments inevitably generate false demand is not the problem.
Businesses like Meta already invest a lot of money in computer infrastructure and make significant profits irrespective of their partnerships with Nvidia. However, the financial relationships inside the AI ecosystem are becoming more intricate.
Nvidia is aware of the danger.
To boost growth prospects and improve its competitive position, it has made pledges and investments across the ecosystem, according to its most recent filing.
Nvidia had $25 billion of future equity investment commitments at the end of July, including $18 billion scheduled for the remainder of fiscal 2027.
Additionally, Nvidia is making ever bigger investments in other areas of AI development. Its pledges for supply and capacity increased from $119 billion to $279 billion in July.
In addition, the corporation committed to $25 billion in data center leases and $29 billion in cloud services.
These figures show how Nvidia is changing from being a chip manufacturer to something much more like an architect and funder of the whole ecosystem of AI infrastructure.
If the need for AI continues to grow, that might fortify its competitive moat.
Additionally, it suggests that Nvidia has more money invested in the sector’s success than ever before.
Therefore, investors should also pay attention to Nvidia’s GPU revenue. It is the magnitude of Nvidia’s investment holdings.
The $3 billion Meta investment may soon seem less like a unique transaction and more like Nvidia’s new business model if stock commitments and purchases keep rising from today’s already remarkable levels.
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ServiceNow’s stock slides as earnings miss overshadows a raised AI outlook
Even with an uptick in multimillion-dollar AI deals, ServiceNow’s earnings results weren’t enough to win over software skeptics.
Why Netflix reportedly walked away from Xbox licensing deal
Netflix (NFLX) reportedly wanted seven years of exclusive film and TV rights to Microsoft’s (MSFT) Xbox game library, which includes popular titles such as Halo and Gears of War.
The streaming company is said to have offered a deal worth half a billion dollars. But Microsoft wanted much more.
According to Matthew Belloni’s report in Puck News, Xbox CEO Asha Sharma asked for $800 million instead, Gadgets Now noted. Then Netflix said no and pulled its offer entirely after an executive change.
How the Netflix-Xbox talks collapsed
The original $500 million offer came from Bela Bajaria, Netflix’s former chief content officer. Sharma and her team countered with an $800 million ask, which Netflix CFO Spencer Neumann rejected because it was too expensive, Puck reported. However, the deal was still on the table at the time.
Also read: Bank of America backs Disney stock as your streaming bill climbs
Then a Netflix restructuring in mid-October brought about 1,000 job cuts and the exit of Bajaria after a decade with the company. After Bajaria left, former Disney executive Peter Rice stepped in as her replacement, Netflix announced.
It was only after the replacement that the Xbox offer came off the table.
Netflix walked away from an $800 million Xbox licensing deal, Puck News reported.ESOlex / Getty Images
Why Xbox felt confident asking for $800 million
Xbox had its reason for asking for a higher amount. Amazon’s “Fallout” show and HBO’s “The Last of Us” both proved that a hit TV adaptation can improve game sales and bring old titles back to life.
And with the 2023 purchase of Activision Blizzard, Microsoft owns the biggest game catalog outside of China.
On Oct. 8, 2026, Microsoft also launched a new division called Xbox XP, led by former Mojang president Kayleen Walters, Xbox confirmed. The group was formed to handle film, TV, merchandise, live events, and brand partnerships.
“Our franchises can mean more to people than the time they spend playing them,” Sharma said in a staff message, as Morningstar reported.
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Now, instead of entering an encompassing exclusive deal with just one company, Xbox is pursuing multiple smaller deals. For example, Amazon gets “Fallout” Season 3, Paramount Pictures gets a “Call of Duty” movie, and Netflix still gets “Gears of War” and “Diablo.”
What the walk-away signals for Netflix shareholders
Netflix investors have been worried about the company spending too much, and the stock’s third-quarter results suggest their worries are valid.
In Q3, Netflix’s revenue grew 12% year over year to $12.9 billion, which sounds fine at first glance, but the company also lowered the forecast for its 2026 advertising revenue from $3 billion to $2.7 billion, an SEC filing confirmed.
A lower ad revenue forecast means Netflix expects less money to come in, which is why investors are paying attention to its spending.
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Wall Street was already losing patience before that report. Back in July, Barclays analysts said Netflix was “losing narrative control,” meaning investors no longer trusted its growth story, Stocktwits reported. When investors begin to lose trust in a stock, the company’s management usually has to prove it can be careful with cash.
Netflix rejecting Xbox’s counter can be seen as a sign that the company’s new leadership is doing exactly that.
The risk Netflix takes by passing on Xbox IP
If gaming adaptations keep producing hits, Netflix could watch competitors build loyal fan bases that might have helped to improve its own number of subscribers.
Microsoft said Netflix remains a “valued partner,” so the other projects they’re working on together, like the Minecraft and Diablo shows, are still on track.
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Robinhood’s prediction-market revenue soars as crypto slumps
Robinhood’s prediction-market revenue surged more than sixfold to $173 million in the third quarter, exceeding its cryptocurrency trading revenue as cryptocurrency sales fell 55% from a year earlier.
The online brokerage lets customers trade stocks, options, cryptocurrencies, and event contracts. These contracts allow traders to take positions on the outcomes of events ranging from sports games to economic reports and elections.
Robinhood’s third-quarter results showed that cryptocurrency trading revenue fell to $120 million, even as growth in options and prediction markets helped lift total revenue 12% to a record $1.42 billion.
The company’s net income declined 14% to $476 million, and diluted earnings per share fell to $0.51 from $0.61 a year earlier. The results included a $67 million unrealized investment loss, primarily related to Robinhood Ventures Fund I.
Robinhood (HOOD) shares fell about 3.58% to $91.18 in afternoon trading on Oct. 28 following the earnings report.
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Prediction markets grow as Robinhood expands beyond sports
Robinhood customers traded a record 16.4 billion event contracts in the third quarter, up from 13.6 billion in the previous quarter, according to the company’s earnings presentation.
Revenue from event contracts rose to $173 million from $156 million over the same period. The business had already generated more revenue than crypto trading in the second quarter.
Trading volume increased about 21% from the previous quarter, compared with an 11% increase in revenue.
The revenue number also included $28 million from Rothera, a separately operated prediction-market exchange established through Robinhood’s joint venture with trading firm Susquehanna International Group.
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Robinhood is expanding beyond the sports contracts that have driven much of the prediction-market industry’s activity.
During the company’s Oct. 27 earnings call, Chief Financial Officer Shiv Verma said non-sports contracts accounted for roughly 30% of prediction-market activity, up from about 15% in the previous quarter.
Robinhood has been adding contracts tied to cryptocurrencies, commodities, and other financial events. It is also preparing products that would let customers trade on whether companies report earnings above or below specified levels.
Unlike a stock, which represents ownership in a company, an event contract’s payout depends on the outcome of a specific question.
CEO Vlad Tenev told investors that Robinhood sees an opportunity in financial-event contracts, where it can draw on its existing brokerage business. He also expects competition in sports contracts to increase as more platforms enter the market.
Robinhood’s prediction-market revenue is growing.Cheng Xin / Getty Images
Midterms could bring new traders, but keeping them is the test
Robinhood launched a dedicated U.S. Midterms Hub in September, giving customers access to event contracts tied to congressional control and other election outcomes ahead of the Nov. 3 midterm elections.
Interest in election-related trading has increased across the industry.
More than $220 million had been wagered on 2026 congressional election markets across Kalshi and Polymarket platforms through September, according to Reuters, citing research from the Anti-Corruption Data Collective.
Trevor Traina, founder and CEO of digital-asset company Kresus Labs and a former U.S. ambassador to Austria, believes major elections can introduce new users to prediction markets.
“I see them now as onboarding catalysts to bring more people onto the platforms,” Traina said in written comments provided to TheStreet.
Traina expects some of that interest to continue after elections. But Robinhood has not disclosed retention figures showing how many customers first attracted by major events remain active afterward.
The industry also faces regulatory uncertainty.
State authorities and prediction-market operators have been fighting over whether sports-related event contracts fall under state gambling laws or federal derivatives regulation, according to Reuters.
Robinhood is developing contracts tied to recurring financial events, including corporate earnings, that could give customers reasons to trade throughout the year.
After the Nov. 3 elections, the company will have another opportunity to see whether trading activity extends beyond major sporting and political events as its financial-contract offerings expand.
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Lumentum’s stock pops as investors cheer a possible sale to Marvell
An agreement between the companies could come next week, Bloomberg reported