Coinbase Says Prediction Markets Among Its Fastest-Growing Units
The crypto exchange told investors its event-contract business has topped $200 million in annualised revenue less than a year after launch, with daily traders up more than 60% in the September quarter.
Coinbase Global reported third-quarter earnings after US markets closed on Wednesday, disclosing that its prediction markets business has become one of the fastest-growing segments in the company's history despite having been operational for less than a year, according to Casino.org News.
The Nasdaq-listed company, the largest regulated cryptocurrency exchange in the US, said the unit "surpassed $200 million in annualized revenue" during the September quarter, while daily traders "grew 60%+ quarter-over-quarter".
Coinbase stated that prediction markets have seen "82% quarterly compound growth since launch", describing the product as among the fastest-growing by revenue in the company's history and as a new growth driver for what it calls its Everything Exchange strategy.
Coinbase offers event contracts through a partnership with an unnamed prediction market operator rather than running the market itself, a structure that mirrors the approach taken by several brokerage rivals that have also moved into yes/no contracts.
The company said traders who use prediction markets are also generating additional activity elsewhere on the platform, noting that "users who trade predictions are also driving incremental spot volume" in cryptocurrency.
That crossover matters to Coinbase's broader ambitions. The Everything Exchange model is built around converting prediction market users into customers of its options, futures and retirement account products, effectively using event contracts as an entry point into its wider financial services offering.
Dat Ngo, an accountant and financial expert at Vetted Prop firms, said using prediction markets to attract traders before moving them into options, futures and retirement accounts "is smart from a business standpoint".
Coinbase chief financial officer Alesia Haas said prediction markets "are adding another revenue stream and are less correlated to crypto volatility", a point the company is keen to stress given that investors have traditionally valued Coinbase shares in line with broader cryptocurrency price movements.
Across the wider prediction markets industry, sports contracts remain the largest source of trading volume, but cryptocurrency-linked event contracts are among the fastest-growing categories outside sport.
That trend favours exchanges with an existing crypto customer base, such as Coinbase, which is positioned as a credible competitor to firms that entered prediction markets from a purely financial or sports-betting background.
Coinbase's own data, showing that prediction market users go on to generate extra spot cryptocurrency trading, supports earlier industry commentary suggesting that many newcomers to event contracts are new to crypto altogether, only to take up digital asset trading once the two activities sit on the same platform.