Finance platforms rushing to incorporate prediction markets are doing so at the expense of increased user churn reminiscent of a “casino,” according to Santiago Roel Santos, founder and CEO of Inversion Capital.
In a blog post from Saturday, Santos expressed his belief in the potential of prediction markets but warned that their addition to mainstream finance apps like Robinhood endangers future value retention by raising user account liquidation risks.
“The issue with casino-like products isn’t merely that users lose money; they accelerate churn,” he explained.
“The longer a user stays in a casino environment, the greater their chances of liquidation, which means they are completely out of the game. A churned user has no value.”
Robinhood has intensified its emphasis on prediction markets in 2025, while crypto platforms Coinbase and Gemini are also poised to introduce similar features that enable users to wager on events such as sports and politics.
Santos noted that such developments overly concentrate on a facet that could detract from the app’s primary function: providing accessible financial services to retail clients.
“Products like Robinhood initially thrive because they are simpler, more user-friendly, and digitally advanced compared to traditional competitors,” he stated.
“However, users age. Ultimately, the real potential lies in evolving with them and encompassing more aspects of their financial lives, not in striving for maximum gains at the peak of speculation,” he added. “If sustainability is important, then you should focus on longevity.”
The adoption of blockchain-based prediction markets surged during the 2024 US elections, with Robinhood initially entering the space back in March through a partnership with Kalshi.
Related: DraftKings eyes crypto offerings as it expands into prediction markets
On Wednesday, crypto exchange Coinbase announced its plans to introduce prediction markets as part of its “everything app” initiative in collaboration with Kalshi, while a Gemini affiliate secured a US license to provide event contracts.
Ultimately, Santos believes that while the short-term performance of prediction markets may appear beneficial, they could pose significant risks that might destabilize users in the long run.
“Financial superapps that consider churn a primary risk will establish stronger competitive advantages and better long-term results,” he argued, adding:
“If I were in that position, I’d focus on providing products that users will genuinely desire as they advance financially: credit cards, insurance, savings options. These may seem dull, but data indicates they work precisely because they align with the core task of managing household liquidity.”
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