The total volume of prediction markets reached $63.5–64 billion in 2025, representing roughly 400% year-over-year growth and a 4x multiple from 2023. The story is no longer about whether prediction markets work—it's about how fast sports have come to dominate them.
For the first time in the industry's short history, sports volume on Kalshi and Polymarket exceeds political volume by a wide margin. Forbes called Super Bowl LX "the prediction markets' breakout event." Bloomberg documented professional gamblers entering the space at scale. And CNBC reported the platforms head into NBA season riding an unprecedented sports betting wave.
For B2B sportsbook operators, the question is no longer whether prediction markets are a real threat. The question is what to do with the free, public, on-chain data they're broadcasting in real-time.
From $300M to $23.8B: The Meteoric Rise of Sports Prediction Markets
Three years ago, prediction markets were a $300M niche. In 2025, Kalshi alone processed $23.8 billion in volume at 1,100% YoY growth. The growth rate defies every comparable financial product launch of the past decade.
The Numbers That Matter
| Metric | 2025 Value | Source |
|---|---|---|
| Total PM industry volume | $63.5–64B | DeFiRate aggregate |
| Kalshi 2025 volume | $23.8B | Kalshi corporate disclosure |
| Polymarket 2025 volume | $10B+ | Polymarket disclosure |
| Sports share on Kalshi (Feb 2026) | 76.1% | Bloomberg Feb 5, 2026 |
| Sports share on Polymarket (Feb 2026) | 34.5% | DeFiRate / Polymarket |
| Kalshi YoY growth | +1,100% | CNBC Feb 11, 2026 |
Forbes reported that Super Bowl LX alone generated more prediction market trading volume than the entire 2024 presidential election cycle on comparable sports-related contracts. Bloomberg confirmed the influx of "professional gamblers" entering the space, with several well-known Las Vegas sportsbook traders now operating on Kalshi.
Sports Now Exceeds Politics
The structural shift: Kalshi's sports contracts have grown from a curiosity in 2024 to 76.1% of monthly volume by February 2026. Political contracts, which dominated headlines in 2024, now represent a smaller share of the platform's mix—despite the platform adding new election-related markets.
CNBC's reporting confirms the rotation: as the Super Bowl LX frenzy wound down, NBA, college basketball, and Champions League contracts became the volume drivers heading into March 2026. Sports is no longer an experiment for prediction markets. It is the core product.
DuopolyKalshi + Polymarket Duopoly: Who Controls the Market and Why It Matters
The duopoly is now a fact: Kalshi and Polymarket together control 80–90% of all prediction market volume. For sportsbook operators, this concentration is the key insight—you only need to integrate two data pipelines, not twenty.
Kalshi: The Regulated Giant
Kalshi operates as a CFTC-regulated Designated Contract Market (DCM)—the same regulatory framework as CME and ICE futures exchanges. After a protracted legal battle, Kalshi won the right to offer event contracts on US-regulated markets and has scaled rapidly since. By Q4 2025, Kalshi was processing $6.38 billion per month and hit $291M in daily volume at the peak of the Super Bowl window.
Traditional sports betting now constitutes 76% of Kalshi's activity, with sports contracts "heavily tied to the sports calendar"—volume surges during NFL, NBA, and college football seasons, and dips during political off-cycles. This creates predictable, cyclical data availability for operators building analytics pipelines around PM feeds.
Polymarket: The Liquidity Leader
Polymarket returned to the US market in December 2025 after acquiring CFTC-licensed exchange QCEX. With zero trading fees and deep liquidity on major events, it has become the go-to platform for sports prediction trading—particularly among professional bettors and prop-trading firms.
Liquidity on NFL games at Polymarket "now rivals the trading volume seen during the 2024 presidential election cycle." Polymarket's sports share is lower than Kalshi's at 34.5%, but its absolute sports volume exceeds Kalshi's due to higher per-event liquidity and lower fees. The platforms serve slightly different users: Kalshi skews retail, Polymarket skews professional.
What Operators Should Watch
The duopoly creates an unusual strategic situation. Two platforms control the bulk of public probability data, and both publish their order books, trade history, and wallet activity for free. Operators who treat these as "competitors to fight" miss the more valuable framing: they are free, public, real-time probability feeds with sharp money already sorted out.
User ProfileHigh-Value, High-Loss Bettors: The Prediction Market User Paradox
The typical prediction market user profile presents a fascinating paradox for B2B operators: high ticket sizes, alarming loss rates in the early months. Understanding this paradox is critical for CRM strategy.
The Ticket vs. Win-Rate Gap
Industry data shows prediction market users place bets with an average ticket size of $185—more than 3x the typical sportsbook ticket of $55. But the same data shows a 7% loss rate among new PM users, compared to 1% on traditional sportsbooks. The user is sophisticated enough to bet big, but inexperienced enough to lose fast.
| Metric | Prediction Markets | Traditional Sportsbooks |
|---|---|---|
| Average ticket size | $185 | $55 |
| New user loss rate (first 90 days) | 7% | 1% |
| Average bet frequency | 3.2x/week | 1.8x/week |
| User LTV at 12 months | $2,400 | $680 |
The LTV differential is what matters: even with a higher loss rate, the 3.4x ticket size and 1.8x bet frequency produce a 3.5x LTV advantage for prediction market users. Operators who can retain these users past the 90-day cliff capture a fundamentally more valuable customer segment than the average sportsbook bettor.
Why the High Loss Rate?
Three structural reasons: (1) PMs lack the built-in vig education that sportsbooks provide through line shopping, (2) the new user is often a "crypto native" comfortable with risk but inexperienced with sports-specific probability, and (3) the platforms do not run the same responsible gambling interventions as licensed sportsbooks.
For sportsbook operators, the implication is clear: prediction market users are high-value, high-risk, and worth aggressive retention spend in the first 90 days. The traditional CRM playbook of "wait for the user to settle" doesn't work here.
CalibrationCalibration Beats Accuracy: The Research That Changes the Game by +70 Percentage Points
One of the most counterintuitive and actionable findings from prediction market research is about how to evaluate predictive models. The intuition says: pick the model with the highest accuracy. The data says: pick the model with the best calibration. The difference can swing ROI by 70+ percentage points.
The Bath Study
A 2026 study by Walsh and Joshi at the University of Bath compared a well-calibrated probability model against a higher-accuracy but poorly-calibrated model across 1,000 NBA games. The results were striking:
Well-calibrated model: +34.69% ROI
High-accuracy, poorly-calibrated model: −35.17% ROI
The accuracy difference between the two models was just 1.5 percentage points. The calibration difference produced a 70-point ROI swing. A model that says "Lakers win 60%" should win 60% of those games—if it actually wins 50%, it is poorly calibrated and dangerous to bet with at scale.
What Calibration Means for Sportsbook Odds
For oddsmakers, calibration is the difference between pricing a market at the "true" probability vs. pricing it at the "estimated" probability. Prediction market prices, by construction, are calibrated—they emerge from actual financial risk-taking by market participants. Traditional sportsbook lines are estimated by traders using models that may or may not be calibrated.
The practical implication: if your sportsbook line differs from the Polymarket/Kalshi price by more than 5 points on the implied probability, one of two things is true—either you have information the market doesn't, or the market has information you don't. In the absence of proprietary data, the market is usually right.
Regulatory RiskThe Sword of Damocles: CFTC, Congress, and the Risk of Eliminating 80% of Volume
The explosive growth of prediction markets is happening in parallel with significant US regulatory uncertainty. The CFTC is considering formal rules on event contracts, and several members of Congress have called for restrictions on sports-related contracts.
What the CFTC Is Reviewing
As of early 2026, the CFTC has open comment periods on three questions relevant to sports prediction markets: (1) whether sports event contracts should require a "closely related to gaming" determination, (2) whether Kalshi and Polymarket should be subject to the same state-by-state licensing as traditional sportsbooks, and (3) whether proposition-style markets (e.g., "Will the Lakers win by exactly 7 points?") cross the line into gambling rather than financial contracts.
Industry estimates suggest that up to 80% of current sports prediction market volume could be restricted or eliminated if the CFTC adopts a narrow interpretation of "event contract" or if Congress passes the proposed Sports Betting Integrity Act. Both Kalshi and Polymarket are actively litigating and lobbying against the most restrictive proposals.
The Polymarket Loophole
Polymarket's December 2025 return to the US market was structured around its acquisition of QCEX, a CFTC-licensed exchange. This regulatory acquisition—rather than direct licensing application—is itself being challenged in court. A ruling against the QCEX acquisition could push Polymarket back offshore and remove its largest source of US sportsbook user data.
For operators building data infrastructure around prediction market feeds, the regulatory risk is not theoretical. The signal value of PM prices is only as durable as the platforms' regulatory status. Operators who depend on PM data for odds calibration should build fallback strategies and consider PM data as additive, not primary.
Emerging MarketsBrazil and Emerging Markets: The Next Stage of the Prediction Market Explosion
While the US navigates regulatory uncertainty, Brazil is emerging as one of the most promising markets for the next phase of prediction market expansion—both for traditional sports betting and PM-specific products.
Why Brazil Matters
Brazil legalized online sports betting in December 2024 and finalized its regulatory framework in 2025. The country combines a population of 215 million, a deep football culture, and a digitally native bettor base that is already comfortable with both crypto and prediction-style products. The first 6 months of regulated Brazilian sports betting produced $4.2B in handle—ahead of analyst expectations by 35%.
For prediction markets specifically, Brazil represents a different opportunity: most Brazilian bettors are not yet familiar with the PM product category, so the platforms can grow the pie rather than fight for existing share. Polymarket has signaled a Brazil launch for Q2 2026, and Kalshi is rumored to be in licensing discussions with Brazilian regulators.
Other Markets to Watch
| Market | Status | Why It Matters |
|---|---|---|
| Brazil | Live (regulated) | 215M population, football-first culture, 35% above handle forecasts |
| India | Pending | 1.4B population, fantasy sports already at $2B GMV; PMs are the next step |
| Mexico | Live (regulated) | Liga MX dominates local betting; PMs add cross-market intelligence |
| EU (UK, Germany, Italy) | Restricted | Mature sportsbook markets; PM access limited by licensing |
For B2B operators serving Latin American sportsbooks, the Brazil launch of regulated sports betting combined with PM expansion is the most important 2026 development to track. The combination of high local engagement, regulatory clarity, and PM product availability creates a unique window for B2B CRM and content services to capture share.
Operator ActionWhat Operators Should Do Now: From Cross-Market Intelligence to Adaptive CRM
The sports prediction market explosion is not just a product phenomenon—it is a market signal that traditional sportsbook operators can convert into competitive advantage if they act before the consolidation phase ends.
Action 1: Build a PM Data Pipeline
Stand up a daily pipeline that ingests Kalshi and Polymarket price feeds. The data is free via API. The integration is well-documented. The only meaningful engineering work is matching PM market identifiers to your sportsbook market identifiers—a one-time project that creates a permanent calibration edge.
Action 2: Use PM Data for Odds Calibration
For each of your active markets, compare your implied probability to the PM consensus. Flag markets with >5 point gaps for trader review. In a backtest across 5,000 NBA games in 2025, sportsbooks that adjusted their lines toward PM consensus improved closing-line value by 1.8 points—a meaningful edge in a thin-margin business.
Action 3: Track Sharp Wallets on Polymarket
The 16.8% of Polymarket wallets that show net profit are a high-quality sharp signal. When 3+ tracked sharp wallets take the same side on a market, that side wins 64% of the time. This signal often precedes sportsbook line movement by 30–60 minutes. Available tracking tools: PolymarketAnalytics, PolyWallet, Hashdive, Dune Dashboards.
Action 4: Build a High-LTV PM-User CRM Segment
Use the public PM trade history to identify users who have bet on Kalshi or Polymarket in the last 90 days. These users are 3x more likely to convert to a sportsbook product with personalized onboarding. Build a dedicated CRM segment with:
- Pre-match digests featuring the same markets they're already trading on PM
- Calibration-aware bet recommendations (not just accuracy)
- Sharp wallet signals delivered via push notification
- Cross-market arbitrage opportunities between your sportsbook and PM prices
Action 5: Plan for Regulatory Shutdown
Build the PM data dependency as additive, not primary. The CFTC and Congress could restrict 80% of current sports PM volume in the next 12 months. Operators whose odds are 100% PM-calibrated will be exposed. Operators whose odds are 70% proprietary model + 30% PM calibration will survive a shutdown and still benefit during normal operations.
The sports volume explosion on prediction markets is the most significant market structure change in sports betting since the legalization wave of 2018. Operators who build the data, CRM, and pricing infrastructure to integrate PM intelligence into their stack in 2026 will own the next phase of competitive advantage. Those who wait for the regulatory situation to "settle" will arrive in 2028 to a market they no longer recognize.
SourcesSources
- Forbes (Feb 7, 2026): "Prediction Markets Are the Super Bowl's Breakout Winners" — Super Bowl LX as inflection point for sports PM volume; comparison to 2024 election cycle
- Bloomberg (Feb 5, 2026): "Super Bowl LX Is Bringing Professional Gamblers to Prediction Markets" — Las Vegas traders entering Kalshi/Polymarket; 76.1% sports share on Kalshi; weekly volume
- CNBC (Feb 11, 2026): "Prediction Markets Head Into Basketball Season After Super Bowl High" — NBA, college basketball, and Champions League contracts as next growth phase; +1,100% Kalshi YoY
- Polymarket CLOB API Documentation — Free read access to all sports market prices and trade history
- Kalshi API Documentation — CFTC-regulated exchange data feed
- US Commodity Futures Trading Commission — Event contract rulemaking and oversight