Prediction Markets Are Now a $6B-a-Week Industry — Here’s Who’s Winning

Feb 8, 2026 - 01:00

Polymarket and Kalshi are battling for control of the fastest-growing corner of finance. With Wall Street piling in, Trump’s family taking stakes and traders quitting their jobs to bet full-time, prediction markets have officially gone mainstream.

Q: What are prediction markets and why are they booming?

A: Prediction markets are platforms where users buy and sell contracts based on the outcome of real-world events — from elections and Federal Reserve decisions to sports results and celebrity announcements. Polymarket and Kalshi, the two dominant platforms, now handle over $6 billion in combined weekly trading volume. The boom has been fuelled by mainstream media partnerships, integration with retail brokerages like Robinhood, and a regulatory environment that has become increasingly permissive under the Trump administration.

In the summer of 2024, a prediction market called Polymarket did something that pollsters, pundits and political journalists could not. It called the US presidential election correctly — weeks before anyone in mainstream media was willing to admit what was happening.

The platform processed $3.7 billion in bets on that single race. And when the result came in, Polymarket’s odds had been more accurate than virtually every traditional poll.

That moment changed everything.

What had been a niche corner of the internet — populated by crypto enthusiasts, political obsessives and quantitative traders — suddenly became the most talked-about innovation in finance. Eighteen months later, prediction markets are no longer an experiment. They are an industry.

As of this week, Polymarket and Kalshi — the two dominant platforms — are collectively handling more than $6 billion in weekly trading volume. That figure is up more than 1,000 percent from the Biden era. Professional traders are quitting six-figure jobs to bet full-time. Wall Street giants are pouring billions into the sector. And the Trump family has taken stakes in both leading platforms.

Welcome to the Great Prediction War of 2026.

The Two Titans

The battle for supremacy in prediction markets has crystallised into a two-horse race between philosophically opposite competitors.

Polymarket is the crypto-native insurgent. Built on blockchain infrastructure, it operates as a decentralised exchange where users trade using stablecoins rather than traditional currency. For years, this structure kept Polymarket outside the reach of US regulators — and outside the US market entirely. In 2022, the Commodity Futures Trading Commission forced the platform to shut down domestic operations for functioning as an unlicensed betting site.

That changed in late 2025, when Polymarket acquired QCEX, a CFTC-licensed exchange and clearinghouse. The deal allowed the platform to legally re-enter the American market, and its trading volume exploded. Polymarket ended 2025 with $33.4 billion in total volume and has since attracted a $2 billion investment from Intercontinental Exchange, the parent company of the New York Stock Exchange.

Kalshi is the regulated incumbent. Founded in 2018 and headquartered in New York, it became the first federally regulated prediction market in US history when it received CFTC approval in 2020. The platform has positioned itself as the Wall Street-friendly alternative — a legitimate financial exchange rather than a crypto casino.

That positioning has paid off. Kalshi processed $43.1 billion in trading volume in 2025, technically outpacing Polymarket in raw numbers. It has struck integration deals with Robinhood and Interactive Brokers, allowing millions of retail investors to access prediction contracts directly through their existing brokerage accounts. CNN and CNBC have partnered with Kalshi to incorporate real-time odds into their coverage. The Wall Street Journal’s parent company, Dow Jones, has done the same with Polymarket.

The lines between financial media and prediction markets are blurring fast.

The Trump Factor

The political winds have shifted decisively in favour of prediction markets.

Donald Trump Jr. now sits on the board of Polymarket. His venture capital firm has invested in the company. He also serves as a “strategic adviser” to Kalshi. And Truth Social, the president’s social media platform, is planning to launch its own prediction market called Truth Predict.

The regulatory posture has followed the political signals. Under the current administration, the CFTC has adopted a permissive stance toward event contracts, declining to challenge the expansion of prediction markets into areas that would previously have been considered gambling. The 2024 federal court ruling that declared election betting does not constitute “gaming” remains the legal foundation on which the industry is building.

For platforms that spent years fighting regulators, the change has been transformative. Polymarket’s re-entry into the US market — unthinkable two years ago — is now an accomplished fact. Kalshi’s aggressive expansion into sports betting, which would have invited immediate enforcement action under previous administrations, has been allowed to proceed largely unchallenged at the federal level.

The result is a gold rush mentality. Traders who once operated in legal grey zones are now building careers in what increasingly resembles a legitimate asset class. The same speculative energy that once drove crypto markets has found a new home — one with clearer rules and more mainstream acceptance.

The Full-Time Traders

Evan Semet is 26 years old. Until recently, he worked as a quantitative researcher at a trading firm, earning a comfortable salary analysing financial models. Then he discovered Kalshi.

“I don’t feel the need for another job at the moment,” he told NPR.

Semet now trades prediction markets full-time, running statistical models on a dedicated Amazon Web Services server to identify mispriced contracts. He reportedly earns six figures a month.

He is not alone. A growing community of “sharps” — sophisticated traders who make their living exploiting inefficiencies in betting markets — have migrated from traditional sportsbooks to prediction platforms. The appeal is straightforward: prediction markets offer better odds, deeper liquidity and fewer restrictions than conventional gambling sites.

“It really feels like everything’s prediction markets, prediction markets, prediction markets,” said Chris Peabody, a professional gambler who began trading heavily on Kalshi in September. “Maybe not for the average recreational bettor, but certainly in the sharp community.”

The platforms have become sophisticated enough to attract institutional interest. Hedge funds are building dedicated prediction market desks. Quantitative traders are developing algorithms to arbitrage price discrepancies between Polymarket’s crypto-based contracts and Kalshi’s regulated offerings. What began as a novelty has become a genuine asset class.

The Legal Battleground

Not everyone is celebrating.

Kalshi is currently facing 19 active federal lawsuits that threaten to fragment the industry into a patchwork of state-by-state regulations. The core question in each case is deceptively simple: Is a prediction market a financial instrument or a gambling operation?

The distinction matters enormously. Financial instruments are regulated by the CFTC at the federal level, which has been friendly to prediction markets. Gambling is regulated by individual states, many of which have aggressive gaming commissions and tribal interests that view prediction markets as unlicensed competitors.

In January 2026, a Massachusetts judge issued a preliminary injunction against Kalshi’s sports-related contracts, ruling they constituted “unlicensed gambling.” The decision forced the platform to geofence Massachusetts users from accessing certain markets. Similar rulings in Maryland have created additional restrictions.

The legal exposure is substantial. Sports-related contracts now account for more than 90 percent of Kalshi’s trading volume. If courts continue ruling that these contracts are gambling rather than financial derivatives, the platform’s entire business model is at risk.

Kalshi is fighting back aggressively, filing offensive lawsuits against regulators in New York, Michigan and Illinois, arguing that the Commodity Exchange Act grants the CFTC exclusive jurisdiction over their operations. The company believes the conflict is ultimately headed to the Supreme Court.

Meanwhile, state gaming commissions and tribal entities have launched their own suits, alleging that Kalshi is operating as an unlicensed sportsbook. Consumer-led class actions focusing on gambling addiction have added another layer of legal complexity.

The industry that European regulators have been slow to address is now at the centre of America’s most consequential regulatory battle.

The Misinformation Problem

As prediction markets have grown, so have concerns about their influence on public discourse.

Both Polymarket and Kalshi maintain active social media accounts that function somewhere between financial news services and engagement-bait factories. The platforms post real-time updates on market movements, often framing speculative betting activity as breaking news.

The line between data and journalism has become dangerously blurred.

In one incident, Polymarket claimed that Iran’s regime had “lost control” of Tehran during a communications blackout, when independent reporting on the situation was virtually impossible. During the controversy over Trump’s Greenland statements, Kalshi falsely suggested the US and Denmark were in “technical talks” to purchase the island. Denmark clarified that the discussions concerned Arctic security, and Kalshi deleted the post.

“We believe in data as a strong complement to the news. Sometimes, rarely, when moving fast, we rely on sources that aren’t accurate,” a Kalshi spokesperson told Axios.

Critics argue that the platforms are incentivised to generate engagement rather than accuracy. Their posts spread faster than verified reporting, reaching millions of users who may not distinguish between market speculation and confirmed facts.

Dennis Kelleher, chief executive of Better Markets, a nonprofit that advocates for financial reform, has been blunt in his assessment: “They are gambling sites no different than FanDuel or DraftKings, a corner bookie, or a casino in Las Vegas.”

The platforms reject this characterisation, arguing that prediction markets serve a genuine informational function — aggregating dispersed knowledge into a single price signal that is often more accurate than expert forecasts.

The debate is unlikely to be resolved soon. But as prediction markets become more influential, the stakes of getting it wrong are rising.

The Meta-Market

In a development that perfectly captures the recursive nature of the industry, traders are now betting on prediction markets themselves.

Manifold Markets, a prediction platform that uses play money and real-money proxies, hosts a contract asking which platform will record the highest trading volume in 2026. As of this week, Polymarket leads with a 47 percent probability, while Kalshi trails at 34 percent.

The contract has become one of the most liquid markets on the site, serving as a real-time scoreboard for the industry’s civil war. More than $50 million in notional value has been traded on the question of which prediction market will win.

The “smart money” appears to be betting on Polymarket’s “Information Finance” model — its focus on high-stakes geopolitical events, Federal Reserve decisions and international elections rather than the sports contracts that dominate Kalshi’s volume. These markets are seen as less vulnerable to the state-level legal challenges currently threatening sports betting.

But Kalshi’s regulatory pedigree and retail distribution advantage keep it firmly in the race. If the platform can navigate its legal challenges and maintain its Robinhood integration, the outcome remains genuinely uncertain.

For traders, the volatility in these meta-contracts has become an opportunity in itself. As prediction markets become the primary way sophisticated investors price the future, the platforms themselves have become the most important “events” of all.

What Comes Next

The prediction market industry is approaching an inflection point.

Coinbase is expected to launch a native prediction market in late Q1 2026, potentially disrupting the Polymarket-Kalshi duopoly. The crypto exchange possesses both the blockchain-native user base of Polymarket and the regulatory licences to operate within the US — a combination that could prove formidable.

The CFTC is expected to issue new “durable standards” guidance in the second quarter, potentially clarifying the legal status of event contracts and establishing consumer protection requirements. The outcome will shape whether prediction markets can continue their current growth trajectory or face new constraints.

And the Supreme Court may ultimately be called upon to resolve the fundamental question that has haunted the industry since its inception: Where does financial hedging end and gambling begin?

For now, the answer depends on which court you ask — and which platform you use.

The same regulatory uncertainty that has plagued Europe’s financial innovation is now playing out in American courtrooms. The difference is that in the US, the industry has grown too large and too connected to political power to be easily suppressed.

Prediction markets are no longer a curiosity. They are a $6 billion-a-week industry with Wall Street backing, White House connections and millions of active traders.

The only question is whether the legal system will let them keep growing — or whether the Great Prediction War of 2026 ends with regulators declaring victory.

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