Prediction market trading volume could hit US$1 trillion by end of the decade

Abi Bray

18 December 2025 at 7:19am UTC-5

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Prediction market platforms could expand dramatically and reach about US$1 trillion in annual trading volume by the end of this decade, according to a report from gaming consultants Eilers & Krejcik.

The report says sports prediction markets are expected to be a major driver of growth, accounting for roughly 44% of long-term trading activity. These platforms also cover politics, finance, culture, and other event outcomes.

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The report highlighted the recent legal trouble that prediction market have faced. Numerous states, including Connecticut, Nevada, and New York, are involved in a legal battle with these platforms in one way or another.

Most of these battles revolve around sports event contracts that regulators consider to be unlicensed gambling, rather than federally regulated financial products.

Eilers & Krejcik Partner Emeritus and Strategic Advisor Chris Grove told CNBC, “Numerous factors, most notably legal and regulatory challenges, could delay or derail the growth of prediction markets, but the fundamental elements of consumer demand and an array of diverse brands looking to meet that demand are clearly in place.”

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Earlier this week, the Pennsylvania Gaming Control Board warned casinos and sportsbooks not to get involved with prediction markets, arguing that platforms such as Kalshi were operating wagering platforms outside of Pennsylvania’s comprehensive consumer protection, responsible gaming, and tax frameworks.

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The Backstory

Why prediction markets are suddenly on the brink

The trillion-dollar forecast for prediction market volumes by decade’s end rests on a simple equation: surging retail participation, institutional liquidity seeping in from Wall Street and an arms race to secure U.S. regulatory clarity before states and federal authorities clamp down. The contours of that equation have sharpened over the past year as a handful of aggressive platforms scaled fast, financiers tested sports-linked contracts and policymakers signaled they would not cede the field to lightly supervised operators.

Two names dominate the story. In November, Kalshi and Polymarket posted a record US$10 billion in monthly trading, according to The Block’s data, with Kalshi leading and Polymarket close behind. The pair now command the bulk of global prediction market activity, forming what analysts describe as an emerging duopoly. Their rapid expansion — driven by retail growth, deeper integrations and constant news catalysts — showed how event contracts have become a real-time sentiment gauge for elections, macro data and global risk.

That growth also unlocked capital. Kalshi doubled its valuation to US$11 billion after a US$1 billion round, while Polymarket notched a valuation of US$8 billion after strategic backing from the owner of the New York Stock Exchange, as reported separately. The funding arms both to scale market coverage and to pay for the legal and compliance infrastructure that regulators increasingly demand.

Wall Street edges into sports-linked contracts

The line between financial trading and sports outcomes has blurred as proprietary firms look for new, liquid edges. Chicago-based Jump Trading has begun making markets on sports event contracts listed by Kalshi, Bloomberg reported, adding institutional depth to a product set that still feels nascent to many retail traders. Jump brings history in sports markets — it operated a London team trading on Betfair for more than a decade — and has previously backed exchange-style sports betting startups.

The appeal is straightforward: event contracts trade like binary options on outcomes the public follows daily, from injury reports to playoff odds. That visibility can draw order flow from both bettors and traders. Other finance names have signaled interest in the space, suggesting a broader migration of expertise and liquidity that could compress spreads, deepen books and standardize pricing across venues if regulators clear a path.

Institutional participation matters for the trillion-dollar thesis. With market makers on board, venues can list more markets, support higher limits and tolerate volatility when news hits, all of which begets more volume. It also raises the stakes for policymakers, who must decide whether these products sit within derivatives law or under state gambling frameworks.

Consumer brands chase the speculative crowd

The competition is no longer limited to crypto-native startups or derivatives-first venues. Sportsbook heavyweight Fanatics has rolled out a prediction markets product in 24 states, offering contracts tied to sports, finance, politics and culture. The move aims squarely at the same demographic powering exchange-style betting and retail options: men ages 25 to 45 who want real-time, tradable exposure to outcomes they track closely.

Fanatics is building the product with Crypto.com’s North American derivatives arm and says it is working with regulators as state-by-state scrutiny intensifies. The entry of a mainstream sportsbook signals two things. First, there is a sizable addressable market for speculative trading around events beyond traditional parlays. Second, the user acquisition battle will hinge on trusted brands that can integrate wallets, rewards and merchandising with liquid markets and competitive fees.

For incumbents such as Kalshi and Polymarket, a well-capitalized rival with a large distribution footprint means the race will not be won on product novelty alone. It will require tight spreads, seamless onboarding, regulatory standing and clear consumer protections — especially if state regulators continue to challenge the categorization of sports contracts.

Regulatory push-pull shapes the runway

The policy fight has intensified as volumes scaled. While federal oversight by the Commodity Futures Trading Commission (CFTC) offers one path to legitimacy for event contracts, state gaming regulators have warned against platforms they see as unlicensed wagering. That tension is now spilling into courtrooms and application queues.

In September, fantasy sports operator Sleeper Markets sued the CFTC and its acting chair, alleging the agency interfered with its bid to become a futures commission merchant. The company said the National Futures Association deemed its application complete, but approval stalled without explanation while a competitor advanced. Sleeper is seeking an order to prevent further interference and declare its application eligible under the Commodity Exchange Act. The case underscores how procedural delays can advantage incumbents and slow new entrants at a critical adoption moment.

Regulatory outcomes will determine how far sports and political markets can grow inside the U.S. If event contracts remain under CFTC jurisdiction with clear rules for listing, clearing and customer protection, institutional participation could expand and cross into mainstream brokerages. If states succeed in walling off sports outcomes as gambling, platforms face a patchwork of permissions that raises costs and dampens liquidity.

The bid to build a fully regulated exchange

Amid the uncertainty, some players are pursuing the heaviest lift: full exchange and clearing licensure. New York-based ProphetX has applied to the CFTC to become both a designated contract market and a derivatives clearing organization, aiming to be the first U.S. exchange and clearinghouse purpose-built for sports event contracts under federal oversight. The proposal includes a request-for-quote parlay mechanism designed to replicate institutional protocols for multi-leg exposure and price discovery.

The dual-track application signals two strategic bets. First, institutions and sophisticated retail traders will favor venues that settle under recognizable derivatives rules with bankruptcy-remote protections. Second, innovation at the contract-design level — think efficient multi-event hedging — can make sports outcomes trade more like an asset class and less like a wager. ProphetX expects its review to run through 2026, a timeline that illustrates how compliance, not just code, will dictate market structure.

What the growth story conceals

Record volumes and funding rounds convey momentum, but the path to a trillion-dollar market is not linear. The same news cycle that fuels trading can trigger scrutiny. Market leadership can attract regulatory tests. And the presence of deep-pocketed brands and market makers can harden the moat for early movers even as it raises standards for risk controls and disclosures.

Still, the ingredients for scale are in place. The November surge by Kalshi and Polymarket shows persistent demand for price discovery on real-world events. Jump Trading’s entry hints at a deeper liquidity pool, while Fanatics’ move underscores how mainstream operators view event contracts as the next frontier for speculative engagement. On the regulatory front, Sleeper’s lawsuit and ProphetX’s bid bracket a policy debate that will decide whether volume consolidates in federally supervised markets, fragments across state lines or migrates offshore.

The stakes are clear: if regulators draw bright lines that allow event contracts to operate as transparent, cleared instruments, prediction markets could evolve into a mainstream tool for hedging and speculation — and approach the trillion-dollar mark. If not, growth will likely slow, innovation will shift jurisdictions and the market will continue to trade in the gray.