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 table
— Santiago R Santos (@santiagoroel) December 21, 2025
Financial superapps are attempting the same optimization. The failure mode is over-extraction → churn
Full analysis:https://t.co/kKfREBJcTk pic.twitter.com/Lu4kunSJhH
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.
- CFTC Oversight Sees DraftKings Launch Prediction Markets Through CME Group
- Coinbase Asks Courts to Bar States From Regulating Prediction Markets
- IG CEO Joins Sportradar Board as Gaming Firm Eyes Entering Prediction Markets
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.
