Susquehanna Is on the Other Side of Moomoo's Prediction Bets

Open the moomoo app now and you can buy a few pennies' worth of "Yes" on whether the Fed cuts rates in September, whether the economy slides, or whether some team wins the World Cup. Moomoo introduced these "event contracts" in the U.S. in June, and the official description is careful: they are CFTC-regulated derivatives on the Kalshi exchange, priced between $0.01 and $1.00, settling at $1.00 if the event happens and $0.00 if it doesn't. They trade like short-dated options — you can sell before settlement — rather than locking you in the way a sportsbook slip does.

Here is the part the product page leaves out: who is on the other side. Every contract needs a price quote and a counterparty, and on Kalshi the firm doing that work is Susquehanna International Group. Susquehanna Predictions, the quant house's dedicated desk, is the designated market maker on Kalshi, quoting a two-sided price and taking the trade.

That name should feel familiar, because there is a sharper version of this story hiding in the same two companies. In June, Susquehanna sued 100 unnamed traders in Manhattan federal court, alleging they used put options to bet against Futu Holdings — moomoo's own parent — and Tiger Brokers in the weeks before China's regulatory crackdown, generating more than $100 million of profit while Susquehanna, as the counterparty, says it lost more than $70 million. So the same machine that stands under moomoo's new retail bets is the one that got run over by somebody who knew moomoo's parent was about to get crushed.

That is the story worth following, because it is not really about prediction markets. It is about who owns the other side of a retail trade, and what it costs when that other side turns out to know something.

The wrapper is new, the machine is old

Start with the product. Moomoo Financial Inc. is a Futures Commission Merchant registered with the NFA, and through its partnership with Kalshi — announced June 4 — it dropped event contracts into the app next to equities, options, and ETFs. The contracts are fully collateralized, meaning the most you lose is the price you paid, and certain states are excluded. On moomoo's own tell, users who trade event contracts become more active in securities trading; in Q2, event-contract trading volume exceeded $200 million within the first month of launch and drove incremental new U.S. clients.

The official framing treats an event contract as a new asset class. In practice this is a very old market structure in a new wrapper: an exchange (Kalshi), a broker that routes order flow (moomoo), and a designated market maker who sets prices and warehouses the risk (Susquehanna). Susquehanna built its prediction-markets desk in 2023 — it says it was the first quantitative trading firm with a dedicated one — and runs it 24/7, quoting two-sided liquidity across finance, crypto, elections, culture, weather, and sports.

The fees matter here. In an options-style market, the spread between the bid and the ask is the market maker's toll booth, and the designation of who gets to operate it is the whole game. For Futu, the value of event contracts is not primarily the per-contract commission — it's the front door: a cheap, sticky, event-driven product that pulls users in and cross-sells them into stocks and options. The professional pricing layer belongs to Susquehanna, not moomoo.

There is also a structural eyebrow-raiser. Susquehanna is not only the liquidity provider on the venue moomoo routes to; it is also the co-owner of a competing venue. With Robinhood, Susquehanna closed the purchase of 90% of the MIAX derivatives exchange in January, building it into a CFTC-regulated futures-and-clearing operation, and by June Robinhood was routing its own World Cup event contracts to that exchange. One quant shop is effectively on both sides of the retail prediction market: pricing the flow on Kalshi, which serves moomoo, and owning the exchange on which Robinhood competes.

What the toll booth costs

The market maker's business model is a single picture. Most days, a market maker collects the spread from a stream of orders that are mostly noise. On the rare days when the flow actually knows something, the market maker absorbs the loss.

That is what the June lawsuit is about. According to Susquehanna's complaint, in the two weeks before China's May 22 announcement, someone or some group spent roughly $12 million on short-dated put options on Chinese brokerages — about 200,000 contracts — and those bets became worth more than $100 million, a return above 900%. Susquehanna says it was the counterparty to most of the trading and lost more than $70 million. A judge froze accounts at Interactive Brokers, Futu, and Tiger Brokers and let Susquehanna subpoena the brokers to unmask the account holders; the SEC and the Justice Department are both reported to be looking into it. Susquehanna alleges the tips may have come from Chinese regulators or from people inside Futu or Tiger's TradeUP unit. These are allegations — no one has been charged — but the structure is the point: the designated counterparty to the whole retail ecosystem is also the easiest mark when a better-informed trader shows up.

What it means for FUTU

Start with the cleanup. China's crackdown hit Futu with a penalty of about RMB1.85 billion, roughly $272 million, and the May 22 announcement sent the stock down about 28% in a day. Management said client asset outflows were only a mid-single-digit percentage of total client assets, mostly absorbed in Q2, with Hong Kong client retention above 98%.

The crackdown did not stop the business. In Q2 2026, reported August 20, Futu's revenue rose 35.6% year over year to HK$7.2 billion, net income rose 41.6% to HK$3.6 billion, and total trading volume hit a record HK$6.42 trillion, up 78.8%. moomoo now accounts for close to 60% of Futu's funded accounts. The company has been buying back stock — about $418 million of ADSs repurchased by the end of June — and pays a dividend.

The current valuation is the interesting part. At $119.28, Futu trades at roughly $16.7 billion in market cap, about 12 times trailing earnings and five times sales, with a 2.2% dividend yield, even after a Q2 that grew revenue 35%. The market is still pricing the China overhang as the dominant fact, not the global story.

Now the risk nobody is pricing like the insiders did in May: the classification fight over the whole event-contract category. New York's attorney general sued Kalshi in late July, calling it an "illegal gambling operation" whose products are "quintessentially gambling"; New Mexico's attorney general filed a similar case in June. So far the courts are split — Tennessee and New Jersey gave Kalshi interim relief in federal court, while Ohio ruled against it. The entire value of this product, including moomoo's FCM pipeline and Susquehanna's desk, sits on a boundary that a growing list of states is trying to redraw: a CFTC-regulated derivative on one side, an unlicensed bet on the other.

The takeaway

So when you see Susquehanna and moomoo in the same headline, the interesting part is not the name-dropping. It is the reminder of how the retail trade actually gets priced. Moomoo owns the front door, but the other side of the ticket is a quant desk that collects the spread on most days — and that already knows, in detail, what it costs when the person across the counter has the better information. Futu's event-contract push is real engagement, but it is a distribution bet, not a money press, and its fate rests on a legal question that is genuinely unresolved. The trade to understand is not the World Cup contract. It is the one that decides whether a $0.60 "Yes" is a derivative or a wager.