Prediction markets were just a little-known area of the Internet where primarily economists and political enthusiasts would hang out five years ago. Now there is a multi-billion-dollar market for them with the support of institutions, government approvals as a regulated business, and large amounts of money traded on some of... Show more
| Category | 2022 | 2026 | Change |
| Major U.S. Platforms | 1 (Kalshi, limited) | 2+ (Kalshi, Polymarket, Crypto.com) | Market expansion |
| Sports Event Contracts | Not offered | Core product category | New vertical |
| Super Bowl Trading Volume | N/A | $1.38B combined | First measured year |
| Projected World Cup Volume | N/A | $2.37B | First tournament |
| Kalshi Valuation | ~$400M | ~$11B (late 2025 reports) | +2,600% |
| Polymarket U.S. Access | Blocked by CFTC | Reopened via QCEX acquisition | Regulatory reversal |
| States Where Available | Varies | All 50 (federal framework) | Nationwide reach |
Mechanisms matter because they tell us all about the regulatory story. Predictive markets do not provide odds like a sportsbook. They list event contracts and allow traders to buy and sell them for prices between $0.01 and $1.00; these prices represent the collective probability estimate of an event based on trader sentiment. For example, if a contract for “France winning the World Cup” is trading at $0.17, then the predictive market collectively believes that there is approximately a 17% chance this will occur. Contracts settle correctly at $1.00 or incorrectly at $0.00.
There is no house in a predictive market. Traders buy from and sell to each other, and the platform generates revenue through transactional fees. This is a massive structural difference between predictive markets and sports books. It is why predictive markets are regulated by the Commodity Futures Trading Commission (CFTC) as financial exchanges rather than being regulated by individual states as gaming operators.
It may seem minor but the implications are huge.
The most recent price increase occurred very quickly; the majority of this occurred in a series of developments occurring from October 2024 through January 2026.
These three milestones build off one another. The judicial determination established the regulatory environment for event contracts. The election brought visibility to the products and demonstrated demand. And finally, sports established a consistent product with which new users become frequent traders.
The unattractive reality behind the bulk of growth is this: Prediction Markets operate in every one of the fifty (50) states while Legal Sports Betting operate in forty-nine (49), plus Washington DC and Puerto Rico.
Because Event Contracts fall into Federal CFTC Jurisdiction, platforms such as Kalshi do not require State by State Licensing as does DraftKings, and FanDuel. There are approximately ninety-one (91) million adult Americans who reside within States where there is no lawful Online Sports Betting, and Prediction Markets represent the sole Regulated Channel available to these individuals.
Regulators at the State Level have taken notice. During 2025, Nevada, New Jersey, Ohio, and numerous other jurisdictions issued Cease-and-Desist Orders to Kalshi citing that despite being classified under Federal Law as a Non-Gambling Contract for Events, Event Contracts relating to Sports events were Gambling under State Law. Kalshi has challenged each of the Cease-and-Desist Orders in Court with generally favorable outcomes; however, the CFTC currently appears to be unwilling to limit the Category of Contracts. The Litigation surrounding the legality of Sports Event Contracts continues to play-out, yet the Contracts continue to trade.
| Platform | Key 2025 Development | Reported Valuation |
| Kalshi | Raised major rounds amid sports expansion | ~$11B by late 2025 |
| Polymarket | $2B investment from Intercontinental Exchange (NYSE parent) | ~$9B |
| Polymarket | Acquired CFTC-licensed exchange QCEX for $112M | Regained U.S. access |
| Crypto.com | Expanded its own CFTC-regulated sports contracts | Undisclosed |
The parent company of the NYSE investing $2 billion in Polymarket clearly states that Wall Street believes event contracts will be an asset class for years to come and that they are not just a flash in the pan. Polymarkets acquisition of QCEX was also very important because it gave them a legal way to enter the US Market again after being banned from entering the US due to a CFTC settlement in 2022.
Prediction market users will require more than just a new experience to continue using prediction markets. Experienced traders know these products also have structural benefits that allow them to benefit from their betting experiences quickly. For example, price setting by competitive bidders is usually better than the price setting of a sportsbook where there is a fixed margin. In addition to selling positions prior to an event ending (a function similar to early cash out for each contract), they do not face trading restrictions/bans as experienced traders frequently do at sportsbooks. On some platforms, the tax treatment for profit from event contracts may differ than winnings from a traditional gamble; however, all traders need to verify this information with a tax advisor.
While these structural benefits exist, there are drawbacks to using a prediction market. There is typically low liquidity for small markets; most parlay and exotic wagering options are unavailable; and consumers enjoy very few protections created through state gaming laws, such as responsible gaming measures, dispute resolution processes and others available on traditional gaming exchanges.
This year’s tournament will likely be the most extensive “live experiment” conducted within this industry. A projected $2.37B in World Cup betting/World Cup trade volume can simply be explained as follows; each one dollar in Super Bowl volume will generate $1.72 in World Cup volume based on 104 games over 6 weeks and states that are currently unable to offer sports books.
If these projections hold true, the current 100% (zero) sports volume for prediction markets will have expanded to capture the equivalent of approximately 75% of all legal sports book handle for the same game/event in less than 18 months.
The growth curve of prediction markets faces three major unanswered questions. Ultimately, courts will have to settle the jurisdiction dispute (federal vs state). Congress may also decide the category (in favor of or against) by statute. Furthermore, the companies operating these markets must demonstrate that they are able to maintain fair market conditions with their large-scale offerings; currently thin markets for remote and relatively unknown events continue to be vulnerable to market manipulations. It appears unlikely that the market will again fade into obscurity. Millions of people in America own accounts, institutional investors are committed to this new asset class and there is proven demand from users who regulatory agencies will find it difficult to eliminate. What started as an entertaining and trivial means of using prediction markets to forecast election results has evolved into a permanent component of the U.S. betting/trading marketplace.
Unlock FREE, Exclusive Bonuses delivered straight to you – only from SweepsPulse.
