For most of 2023 and 2024, prediction markets were a political story. Polymarket dominated election coverage. Kalshi fought the CFTC to list political event contracts. Every piece of mainstream coverage led with odds on who would win the presidency. The implicit narrative was clear: prediction markets were an interesting new mechanism for political speculation, not a structural threat to the sports wagering industry.
That framing is now definitively wrong. In January 2025, Kalshi launched sports contracts. Within twelve months, those contracts accounted for 87% of its $24 billion in annual trading volume. The political betting market that consumed so much regulatory oxygen turned out to be a prologue. Sports was always the main event.
The Inflection PointFrom Political Novelty to Sports Exchange: The 2025 Pivot
The numbers are unambiguous. Total prediction market notional trading volume grew from approximately $15.8 billion in 2024 to $63.5 billion in 2025—a 400% year-over-year increase, according to data compiled by Gambling Insider and corroborated by the EK Report cited by CNBC. That growth was not driven by elections, referendums, or geopolitical events. It was driven by sports contracts that launched in January 2025 and immediately absorbed the majority of retail trading activity.
The 2024 U.S. presidential election did create a meaningful spike. October 2024 saw $4.5 billion in monthly trading volume—a figure that had seemed extraordinary at the time. But when the election resolved, volumes did not collapse back to pre-election levels. Post-election monthly volumes settled in the $1.5–2 billion range, far above the baseline that existed before the political cycle began. Sports, launching into this expanded baseline in January 2025, did not simply maintain that floor—it demolished it.
| Period | Monthly PM volume (approx.) | Primary driver |
|---|---|---|
| Early 2024 | <$100M | Crypto, misc. events |
| October 2024 (election peak) | $4.5B | U.S. presidential election |
| Post-election floor (late 2024) | $1.5–2B | Politics, crypto |
| December 2025 (sports peak) | $13B+ | NFL playoffs, CFP |
Sports is not a seasonal add-on bolted onto a political platform. It reset the permanent floor of prediction market activity. Monthly transaction counts grew from roughly 240,000 to over 43 million per month across the industry—a 130x increase in just over a year. The infrastructure, the retail audience, and the liquidity all moved together.
Platform BreakdownKalshi vs. Polymarket: Two Different Bets on the Future
The prediction market industry is, for practical purposes, a duopoly. Kalshi and Polymarket together controlled approximately 97.5% of global prediction market volume in 2025, according to analysis by Phemex. Combined, they drove $38–39 billion of the $63.5 billion total. Understanding how they differ structurally matters enormously for operators trying to read the competitive landscape.
Kalshi is, functionally, a sports exchange. Of its $24 billion in 2025 trading volume, 87% came from sports contracts—meaning only roughly $3 billion originated from all other categories combined. That makes Kalshi more sports-dependent by volume concentration than DraftKings or FanDuel. Kalshi processed 74 million total trades in 2025. Its monthly trade count grew 106x: from approximately 196,000 trades per month at the start of the year to 21 million by year-end. That growth curve reflects one thing above all else: the mass arrival of retail sports bettors.
Polymarket tells a more balanced story. Its 2025 volume split approximately as follows: sports at 39%, politics at 34%, crypto at 18%, per Sacra Research. Polymarket processed 95 million total trades in 2025—more than Kalshi—and its monthly trade count grew an extraordinary 421x (from roughly 45,000 to 19 million per month). But the composition matters: politics on Polymarket still outpaces sports by 400% in open interest, even though trade count tells the opposite story. This reveals something structurally distinct about each platform's audience.
| Platform | 2025 total volume | Sports share | Total trades | Monthly trade growth |
|---|---|---|---|---|
| Kalshi | $24B | 87% | 74M | 106× (196K → 21M) |
| Polymarket | ~$15B | 39% | 95M | 421× (45K → 19M) |
| Combined | ~$39B | 97.5% market share | 169M | — |
Football Alone Nearly Consumed an Entire Industry
The dominance of American football within the already sports-dominant prediction market landscape is difficult to overstate. During December 2025—the College Football Playoff and the run-up to NFL playoffs—football (NFL plus college combined) reached 90% of Kalshi’s total trading volume, according to Closing Line's platform analysis. A single-sport category was absorbing the majority of activity on a multi-billion dollar exchange.
A single week in December 2025 set a $1.7 billion record for Kalshi alone. The combined weekly peak for Kalshi plus Polymarket reached $5.23 billion—a number that exceeds the entire monthly volume Polymarket was processing at its 2024 political peak. The growth curve was not linear; it was vertical.
Super Bowl LX in February 2026 was the largest single prediction market trading event in recorded history. Kalshi alone cleared over $1 billion on game day—a 2,700% year-over-year increase from Super Bowl LIX. Combined Kalshi and Polymarket volume on Super Bowl Sunday reached $1.63 billion. Kalshi’s total Super Bowl week (not just game day) reached $2.8 billion.
To put that in context: the American Gaming Association reported that traditional sportsbooks handled approximately $1.76 billion in Super Bowl LX wagers—a 27% year-over-year increase for traditional books. Prediction markets, a category that barely existed two years prior, now account for approximately 26% of all legal Super Bowl wagering. The structural shift is not coming. It is here.
Sportsbook ResponseDraftKings, FanDuel, and the Race to Not Be Left Behind
Financial markets priced the competitive threat before operators did. DraftKings and FanDuel each lost roughly half their stock market value as Kalshi surged through 2025—investors were not treating this as a novelty. They were pricing in structural competitive risk. The public market read was that a federally-regulated, 50-state accessible prediction market exchange competing directly for the same retail sports bettor was not a niche threat.
DraftKings CEO Jason Robins offered a framing that received considerable attention: departing users were characterized as “low-margin or negative-margin customers.” That framing may prove difficult to sustain as prediction markets scale. The 2 million daily active users on Kalshi during Super Bowl Sunday were not, by definition, a fringe audience.
The industry response, at least at the acquisition and partnership level, was swift:
- DraftKings acquired Railbird, a prediction market platform, signaling intent to compete directly rather than cede the category
- FanDuel announced a partnership with CME Group, leveraging institutional exchange infrastructure
- Fanatics and PrizePicks both entered the prediction market space
The deeper structural problem is regulatory. Traditional sportsbooks operate under a state-by-state licensing patchwork—as of 2025, legal in 38 states with varying tax rates, marketing restrictions, and product constraints. Prediction markets operating as CFTC-regulated event contracts can offer products in all 50 states, with no state-level licensing burden. The CFTC withdrew its proposed ban on sports and political event contracts in January 2026 and announced clear regulatory standards under new chair Michael S. Selig. The federal runway is now open.
Mainstream Has Arrived: 2 Million Daily Users on a Single Sunday
The most significant signal from Super Bowl LX was not the volume figure—it was the user behavior underneath it. Kalshi app downloads surged 1,544% year-over-year during Super Bowl week 2026. Daily active users on the platform hit nearly 2 million on game day, a 1,100% increase year-over-year. These are consumer adoption metrics, not niche crypto exchange growth curves. They describe a mainstream product reaching a mainstream audience at a major cultural moment.
The composition of that audience matters for operators. The sports prediction market user is not the political betting sophisticated—the high-net-worth individual placing large positions on electoral outcomes. The sports user looks much more like the daily fantasy and retail sportsbook customer: small-ticket, high-frequency, event-driven engagement. The overlap with the existing DraftKings or FanDuel customer base is not incidental. It is the point.
The broader legal sports betting market remains massive. The American Gaming Association reported $149.67 billion in total sports betting handle in 2024 across 38 states, generating $13.71 billion in gross revenue. Approximately 76 million Americans—20% of the adult population—placed at least one legal sports bet in 2024. NFL wagering alone reached $35 billion in the 2024 season (30%+ year-over-year growth), settling at $30 billion in 2025.
Prediction markets are not replacing this foundation. They are layering on top of it—capturing incremental participation from geographies traditional books cannot reach and from a retail audience whose engagement behavior matches prediction market mechanics better than single-game parlay products. The growth is additive at the industry level, even as it is directly competitive at the operator level.
KPMG flagged the rapid growth in both institutional and retail participation. Institutional capital gravitates toward political markets with their larger position sizes and slower resolution cycles. Retail capital—the mass audience—gravitates toward sports. The Super Bowl numbers confirm that the retail migration has arrived at scale.
What Comes NextThe $10B Revenue Projection and What It Means for Operators
Citizens Financial Group projects prediction market revenues reaching $10 billion by 2030, up from approximately $2 billion currently. The EK Report, cited by CNBC, projects total prediction market trading volume could hit $1 trillion by the end of the decade. Both projections assume continued regulatory clarity—which the CFTC’s January 2026 decision substantially provides—and continued sports contract expansion across leagues and markets.
The sports share concentration will likely moderate as the market matures. At Kalshi today, 87% sports share reflects the recency of sports contract launch relative to established political and crypto markets. At maturity, sports is forecasted to settle near 44% of total prediction market volume—still the dominant single category, but in a more balanced ecosystem. That rebalancing does not diminish the sports opportunity; it contextualizes it.
For traditional operators, the strategic question has already shifted. It is no longer “should we respond?” The acquisition activity—DraftKings buying Railbird, FanDuel partnering with CME—answers that. The question is how to integrate the information prediction markets generate into existing systems.
Prediction markets have a specific informational property that traditional sportsbooks lack: sharp money moves earlier and more visibly. When a prediction market contract on a game outcome moves significantly before a traditional book adjusts its line, that signal has analytical value. Kalshi processed 21 million trades per month by December 2025. That is 21 million price discovery events happening in a market where the participants include both unsophisticated retail traders and highly sophisticated arbitrageurs. The line movement data from that market is not noise. It is signal.
Operators who learn to read prediction market liquidity flows—which contracts are moving, at what velocity, with what open interest concentration—gain a structural edge in pricing high-volume events. The operators who continue to treat prediction markets as a separate channel they do not need to monitor will find themselves repeatedly behind on line movements that their competitors are catching earlier.
Data Sources & Attribution
- Gambling Insider: Prediction Market Statistics — $63.5B total 2025 volume; 130x monthly volume growth
- CNBC / EK Report — 400% YoY growth; $1 trillion volume projection
- The Block: Kalshi/Polymarket Duopoly 2025 — Kalshi $24B volume (167x growth), trade count data, Polymarket 421x trade growth
- Sportico — Kalshi 87% sports share of volume
- Closing Line (Substack) — Kalshi December 2025 90% football share; $1.7B single-week record
- Sacra Research — Polymarket volume split (sports 39%, politics 34%, crypto 18%)
- Phemex — Kalshi + Polymarket 97.5% combined market share
- Citizens Financial Group — $10B revenue projection by 2030
- American Gaming Association — $149.67B sports betting handle 2024; Super Bowl LX traditional book figures