Robinhood Markets Inc. and Susquehanna International Group are taking over a regulated exchange that was tied to the now-defunct crypto business FTX, giving them a powerful new foothold in the fast-growing world of prediction markets.
The two firms are buying a majority stake in LedgerX, a US-based derivatives exchange once owned by FTX and now run by Miami International Holdings Inc.
The buyers already have strong ties to prediction markets. Susquehanna has said it serves as a market maker on Kalshi, the leading US prediction market exchange. Robinhood offers Kalshi’s event contracts to its retail investing clients.
The new deal will give Robinhood and Susquehanna direct control of the infrastructure needed to list and clear event contracts on their own terms, at a moment when Wall Street, sports leagues, and crypto firms are racing to shape the future of regulated speculation.
“Robinhood is seeing strong customer demand for prediction markets,” JB Mackenzie, vice president and general manager of futures and international at Robinhood, said in a statement. “Our investment in infrastructure will position us to deliver an even better experience and more innovative products for customers.”
Financial details of the transaction were not disclosed, but MIAX said it is selling 90% of the exchange to the Robinhood-led group. Robinhood said it would be the “controlling partner” in the new venture, with Susquehanna serving as a “day-one liquidity provider” so that customers have a counterparty for trading.
The move could represent a challenge for Kalshi because it has used its partnership with Robinhood to get its contracts in front of a broad audience. More than half of Kalshi’s business in recent months has come from Robinhood, according to an analysis from Bloomberg Intelligence.
In its most recent earnings release, Robinhood said that its customers traded 2.3 billion event contracts in the third quarter, more than double the quarter before.
“I’m sure Kalshi is counting the activity that we send to them, which is quite substantial,” Robinhood’s chief financial officer, Jason Warnick, said on a call with analysts this month.
Kalshi declined to comment on the MIAX deal.
Kalshi was one of the first companies to get approval from the Commodity Futures Trading Commission to open an exchange for listing financial contracts tied to the outcome of events. The business has exploded this year since Kalshi used its exchange to begin offering trading on sports games.
There is still significant legal uncertainty around the business. A federal judge in Nevada ruled this week that Kalshi is subject to gaming regulators who have told the company to stop offering sports contracts in the state.
The same judge also declined on Tuesday to grant Robinhood a temporary restraining order to prevent Nevada’s gaming regulator from taking enforcement action against the brokerage. Robinhood said it would appeal the decision.
In the meantime, several companies interested in prediction markets have acquired US-regulated derivatives exchanges to begin offering contracts to compete with Kalshi.
DraftKings, the sports gambling company, purchased its own exchange and FanDuel, a unit of Flutter Entertainment Plc, has a partnership with the CME Group Inc. to create a new platform for wagering on sports and other events. Polymarket, which has offered prediction markets overseas, said on Tuesday that it received a new approval to enter the US through QCX, a regulated exchange it recently acquired.
LedgerX, which began as a platform for crypto-related derivatives, was one of the few solvent pieces of FTX when it went bankrupt. It was an important part of Sam Bankman-Fried’s push to gain power and influence in Washington. After FTX collapsed in 2022, MIAX bought the platform for $50 million as a way to expand its presence in the crypto industry.
MIAX said on Tuesday that it is keeping a 10% stake in the new business to gain exposure to prediction markets.
