Prediction markets are posting explosive growth in 2026, with Bernstein projecting the sector could reach $1 trillion in annual trading volume by the end of the decade — even as a sprawling regulatory battle over sports event contracts threatens to reshape the landscape.
Combined volume on Kalshi and Polymarket, the two largest platforms, has already exceeded $60 billion in the first months of this year, surpassing the $51 billion recorded across all of 2025. Bernstein analyst Gautam Chhugani now projects total market volume will hit $240 billion for the full year – a 370% increase over last year – climbing to $1 trillion by 2030 at a compound annual growth rate of roughly 80%.
As reported by CNBC, Bank of America analyst Julie Hoover described Kalshi as one of the "fastest growing non-AI companies" in the US in a recent note, pointing to weekly trading volume that has surged to more than $3 billion from roughly $100 million a year ago. Kalshi currently controls more than 90% of the US prediction market.
Monthly trading volume on Kalshi, Polymarket, and Polymarket US has surged since mid-2025, with combined activity topping $24 billion in March 2026. Sports contracts currently account for more than 60% of overall prediction market volume. (Source: The Block)
Sports contracts account for more than 60% of prediction market trading volume today, though Bernstein expects that share to drop to about 31% by 2030 as institutional interest in economic, political, and macroeconomic contracts grows. "Sports is the entry point, not the endgame," the firm's analysts wrote.
Chhugani sees the institutional segment as a particular area of long-term expansion. "We expect [the] institutional market to develop around economics, business and political contracts, as investors seek more direct and discrete exposure to events," he wrote. "We also expect hedging demand from corporates, [and] insurance firms exposed to specific event risks."
At the same time, sports betting is where the legal pressure is mounting. More than a dozen states have taken legal action against Kalshi and Polymarket, arguing that sports event contracts should be governed under state gambling law rather than classified as federally regulated swaps.
Hoover noted that "legal action is now pending in 14 states, plus another 4 congressional bills [are] also pending amid concerns around insider trading."
Adding weight to the states' position is Gary Gensler, who served as chair of both the Commodity Futures Trading Commission and the Securities and Exchange Commission and was a principal architect of the Dodd-Frank regulation that brought swaps under federal oversight.
In an interview with Barron's, Gensler said he never intended for sports betting to fall under the CFTC's authority.
"I never once ever heard a member of Congress or their staffs suggest that the law they were writing, acting upon, and voting on was for our little agency, the CFTC, to have oversight over sports betting," he said. His view on classification is equally direct: "Betting on sports is gaming."
The CFTC under current chair Mike Selig has taken a firmly opposing stance, filing lawsuits alongside the Department of Justice against Arizona, Connecticut, and Illinois to defend federal jurisdiction.
Courts have largely sided with the platforms: a recent third circuit federal appeals court ruling affirmed that sports event contracts qualify as swaps because "the outcome of a sports event certainly can be associated with a potential financial, economic, or commercial consequence."
Gambling attorney Daniel Wallach, who has been closely tracking the cases, argues that reasoning is insufficient. "The courts are wearing blinders and just focusing on the plain language of the statute," he said. "They're not taking into account all the legislative history and statements made at the time of the enactment of Dodd-Frank."
For advisors and investors looking for public market exposure to prediction market growth, Bernstein points to Robinhood and Coinbase as the primary traded proxies, rating both as outperform.
Robinhood's prediction markets hub – built on Kalshi's infrastructure and now about a year old – is generating roughly $350 million in annual recurring revenue and accounts for approximately 30% of Kalshi's total volume. Chhugani projects Robinhood's prediction market revenue will grow from roughly $150 million in 2025 to about $586 million in 2026.
Polymarket, meanwhile, has recently moved away from a zero-fee model and is now tracking an annual recurring revenue of $420 million. DraftKings and Underdog are among the platforms also entering the space.
Chhugani acknowledged the regulatory headwinds but maintained his long-range outlook, writing that platforms like Kalshi and Polymarket stand to "benefit from increasing regulatory clarity and growing alignment with federal regulators – a key driver of market legitimacy and mainstream adoption."
Jim Walesa worked in the securities industry for 39 years before leaving in 2021.
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