Prediction market add-ons will accelerate fintech churn, says Inversion CEO

Inversion Capital founder Santiago Roel Santos said that adding prediction markets too quickly can turn user engagement into a “casino-like” churn cycle. Overall, the optimism behind prediction markets is rising, but Santos cautioned that incorporating them into mainstream platforms like Robinhood may carry potential long-term risks.

He commented, “The problem with casino-like products isn’t that users lose money. It’s that casinos accelerate churn. 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.”

Santos says mainstream platforms should focus on growing with users 

Robinhood and other platforms began incorporating prediction markets in 2025 by partnering with prediction companies. In August, Robinhood partnered with Kalshi to enter the sports betting market.

The company’s Prediction Markets Hub now enables users to wager on popular pro and college football games. In addition, Coinbase is also preparing to launch its own prediction market, in collaboration with Kalshi, as it seeks to expand the range of asset class offerings on its website amid declining demand for digital assets. Gemini was also granted CFTC authorization to be a Designated Contract Market, offering regulated prediction markets for customers in the United States.

However, Santos believes that trying to put such services on mainstream platforms would be more of a departure from their key mission of providing a stable and reliable service to retail users. He argued that, for Robinhood and similar platforms, what matters is the simplicity of their platform design and accessibility; the trick is to achieve long-term growth with users, rather than maximizing short-term payouts.  He added, “If durability matters, you optimize for staying power.”

In his X post, he also explained, “Casinos serve just enough alcohol to increase the house edge, but not enough to make players leave the table. Financial superapps are attempting the same optimization. The failure mode is over-extraction → churn.”

Critics argue that weak regulation makes prediction markets vulnerable

The Inversion Capital Founder said prediction markets can potentially create a spike in numbers, but at the cost of long-term risks that may threaten user stability on financial apps. Products like credit cards, insurance, and savings accounts are not as flashy, he said, but they tend to foster long-lasting relationships with users because they’re integrated with everyday financial management. 

Critics have attributed the growth of betting markets and the muddied distinction between trading and gambling to the Trump administration’s relaxed regulatory approach. They said this lack of scrutiny also leaves the markets vulnerable to insider influence and abuse.

Prediction markets, notably Polymarket and Kalshi, surged during the 2024 US presidential race, generating billions in betting and consistently tilting the odds in Trump’s favor, contrary to polling data. By the time the elections were drawn to a close, the markets appeared to be more accurate, reinforcing the view that betting markets would outperform traditional forecasting. 

So far, Polymarket and Kalshi have partnered with top news organizations, including CNBC, Yahoo Finance, and CNN, to incorporate prediction market odds into their reporting.

In early 2025, Intercontinental Exchange also revealed plans to invest up to $2 billion in Polymarket, part of demand prompted by a surge in customer interest in market predictive data for trading.

However, regulators in multiple states, including Nevada, New York, and Massachusetts, have attempted to halt the operations of prediction markets, particularly those of Kalshi. They’ve contended that the platform’s contracts are classified as gambling wagers, so the company is now embroiled in lawsuits questioning regulators’ power to pursue the platform.

Claim your free seat in an exclusive crypto trading community - limited to 1,000 members.