Popular
fintech platforms adding prediction markets right now are prioritizing
short-term revenue at the expense of user retention, according to Santiago Roel
Santos, founder and CEO of Inversion Capital.
The
investor published his concerns in a weekend blog post, warning that these
products introduce what he calls “casino-like” dynamics that increase
the likelihood of account liquidation.
“The
problem (…) isn’t that users lose money. It’s that casinos accelerate
churn,” Santos
wrote. “The longer you exist inside a casino, the higher the
probability of liquidation. And liquidation means you’re out of the game
entirely. A churned user is worth zero.”
Casinos serve just enough alcohol to increase the house edge, but not enough to make players leave the tableFinancial superapps are attempting the same optimization. The failure mode is over-extraction → churnFull analysis: pic.twitter.com/Lu4kunSJhH
— Santiago R Santos (@santiagoroel) December 21, 2025
Competition Intensifies
for Prediction Markets
The warning
comes as multiple platforms expand into the event based contracts. Coinbase
announced this
month it would add prediction markets through a partnership with Kalshi,
while Gemini secured
a CFTC license to
launch its own event contracts.
Robinhood,
which partnered with Kalshi in March to offer NFL and college football markets,
has called the niche its fastest-growing
business.
The broader
industry shift toward one-stop-shop financial platforms has prompted
established players to add prediction markets alongside traditional trading
products.
Interactive
Brokers brought “yes-or-no”
trading to Europe earlier this year, while Plus500
entered the
space by clearing contracts for a CME and FanDuel-backed platform.
Monthly
trading volumes on prediction market leaders Kalshi and Polymarket jumped from
less than 100 million dollars in early 2024 to over
13 billion dollars in November. Robinhood’s stock climbed more than 200
percent in 2025, partly attributed to its prediction market offerings.
Not
everything, however, is as rosy as it looks. As early as April this year, I was
asking whether event-based contracts are
still investing or already binary options mixed with gambling.
Financial Superapps Face
Durability Question
Santos
contends that while prediction markets will show positive results on near-term
balance sheets, they could prove unstable for platforms positioning themselves
as comprehensive financial services providers. He argues the risk lies in how
these products affect the core value proposition of apps like Robinhood, which
initially attracted users through simplified, accessible interfaces for
mainstream financial services.
“Products
like Robinhood succeed initially because they are simpler, more accessible, and
more digitally native than incumbents,” Santos said. “But users age.
Over time, the real opportunity is to grow with them and capture more of their
financial lives, not to maximize extraction at the moment of peak
speculation.”
The
Inversion Capital CEO suggests platforms would see better long-term outcomes by
focusing on products that align with users’ evolving financial needs, such as
credit cards and savings vehicles. These offerings, while less flashy than
prediction markets, create stickier relationships and reduce the risk of users
losing their entire account value through liquidation.
“Financial
superapps that treat churn as a first-class risk will end up with stronger
moats and better long-term outcomes,” Santos wrote.
Blockchain-based
prediction markets saw adoption surge during
the 2024 U.S. elections, with platforms recording billions in trading
volume around political events. The growth attracted attention from both
crypto-native exchanges and traditional finance platforms looking to expand
their product lines.
This article was written by Damian Chmiel at www.financemagnates.com.
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