“While prediction market volumes initially jumped in 2024 around the U.S. presidential election, they eventually surpassed those levels in 2025 as sports, cryptocurrency and macroeconomic contracts became popular.”

“$1 trillion by 2030 Bernstein analyst Gautam Chhugani now estimates that total market volumes in 2026 will reach $240 billion, a 370% increase compared to last year. At a compound annual growth rate of roughly 80% between 2025 and 2030, Chhugani sees prediction market trading volume of $1 trillion a year by the start of the next decade.”

“Chhugani expects increased regulatory clarity at the federal level will boost the potential market, and that blockchain tokenization and integration with cryptocurrencies is enabling more liquidity. The makeup of traded contracts is also likely to change, he said.”

“While Kalshi and Polymarket dominate the space, new names are building a presence. Robinhood, DraftKings and Underdog are all starting or have already launched their own prediction market verticals, Bank of America's Hoover said.”

“Public proxies Robinhood and Coinbase Global are the key public market proxies for the private prediction market companies, Chhugani said. Robinhood's prediction markets hub is now a year old, generating $350 million in annual recurring revenue, and accounting for some 30% of Kalshi total volume. The market is the digital finance platform's fastest-growing business, and could encourage Robinhood to develop its own exchange, the analyst said.”

“While Chhugani's long-range estimates assume the resolution of long-term regulatory risk, in the near-term state and federal regulators and the prediction markets themselves are engaged in a pitched battle. 'Legal action is now pending in 14 states, plus another 4 congressional bills [are] also pending amid concerns around insider trading,' Hoover wrote.”

“Some states have begun legal action against prediction markets, citing their authority to regulate sports betting, while the Commodity Futures Trading Commission is fighting states, claiming it has the only authority to regulate prediction markets.”