Prediction markets are spreading fast across the fintech world. Users can now trade on Bitcoin prices, election outcomes, sports results, and even unusual global events. What started as an experiment is now being pushed by major platforms like Robinhood, Coinbase, Gemini, Interactive Brokers, and Plus500.
The growth looks impressive. Trading volumes have jumped into the billions, and companies offering these products are seeing strong revenue boosts. Some stocks have even surged because of this trend. But behind the excitement, an uncomfortable question is starting to surface: are prediction markets building long-term value, or are they slowly damaging retail trading apps from the inside?
What Prediction Markets Actually Offer
Prediction markets allow users to trade simple “yes” or “no” contracts based on future events. There is no long-term holding and no gradual learning curve. The result is clear and final. Either the event happens, or it doesn’t.
This structure makes prediction markets easy to understand and very tempting, especially for new users. But simplicity comes at a cost. Because outcomes are binary, losses are often total. A few wrong bets can wipe out an entire account balance in a short time.
This raises an important concern. When trading feels more like betting, user behavior changes. Decisions become emotional, faster, and riskier. And once emotions take over, financial discipline usually disappears.
The Real Danger: User Churn
Santiago Roel Santos, founder and CEO of Inversion Capital, believes the biggest risk is not losses themselves. According to him, the real problem is churn; users leaving the platform for good.
He explains it simply: “A churned user is worth zero.” When users lose their full balance, they don’t downgrade. They don’t pause. They exit completely. And once they leave, they rarely come back.
Prediction markets, he argues, create casino-like dynamics. The longer users stay, the higher the chance they eventually lose everything. And when liquidation happens, the relationship between the user and the platform ends instantly.
Why Platforms Are Still Rushing In
Despite these warnings, platforms are moving quickly to add prediction markets. Coinbase recently partnered with Kalshi. Gemini secured a CFTC license. Robinhood says prediction markets are its fastest-growing business line.
Traditional brokers are also joining the trend.
The numbers explain why. Monthly volumes on major prediction platforms have jumped from under $100 million in early 2024 to more than $13 billion by late 2025. Robinhood’s share price rose more than 200 percent this year, partly driven by this growth.
In the short term, prediction markets look like a clear win. They increase engagement, trading frequency, and revenue. But short-term success does not always mean long-term stability.
When Financial Apps Stop Growing With Users
Most successful fintech apps started with a simple promise: make finance easy and accessible. Over time, users grow older. Their needs change. They want saving tools, credit products, and long-term investing options.
Santos argues that the real opportunity for financial superapps is growing alongside their users, not extracting value during moments of peak speculation. Prediction markets, however, do the opposite. They focus on fast wins instead of lasting relationships.
Here comes the cliffhanger: what happens when users mature, but the platform keeps pushing high-risk products?
Are Prediction Markets Just Gambling in Disguise?
Critics are now asking whether event-based contracts are simply binary options with a new name. Binary options once followed a similar path: rapid growth, heavy retail losses, and eventual regulatory backlash.
Prediction markets are currently regulated and legal in many regions. But regulation does not automatically mean suitability. If too many users lose too much too fast, history suggests that scrutiny will increase.
And when scrutiny comes, platforms built on fragile user trust may struggle to survive.
The Choice Facing Financial Superapps
Prediction markets are not going away. They attract attention, volume, and headlines. But attention is not loyalty. Revenue is not retention.
The platforms that succeed in the long run will be those that treat churn as a serious risk and focus on products that keep users financially healthy. Savings accounts and credit cards may not be exciting, but they build trust and longevity.
The final question remains unanswered: will retail trading apps choose fast money, or will they choose durable relationships?
Because in finance, once trust is lost, no market can predict how, or if, it will return.
