What started as a niche corner of the internet has quickly evolved into one of the most talked-about segments in both crypto and traditional finance. Thanks to the rapid rise of platforms like Polymarket and Kalshi, prediction markets are now attracting billions in volume.
For many investors, prediction markets are becoming “the new gold”: a fast-growing, highly profitable segment sitting at the intersection of speculation, information, and financial innovation. Some of the biggest names in the industry are rushing to get involved.
What Are Prediction Markets?
Prediction markets allow users to bet on the outcome of real-world events. These can include:
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Election results
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Sports outcomes
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Central bank interest rate decisions
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Economic data releases
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Political developments
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Even cultural or entertainment events
Users buy contracts that pay out if a specific event happens or does not happen. In simple terms, participants are putting money behind their expectations of the future.
Unlike traditional betting platforms, prediction markets often function more like financial derivatives exchanges. Contracts trade dynamically, with prices reflecting the market’s collective probability estimate of an event occurring.
For example, if a contract that pays $1 if a candidate wins trades at $0.65, the market is effectively pricing in a 65% probability of victory.
Kalshi vs. Polymarket: Two Different Models
Two platforms have dominated headlines: Kalshi and Polymarket, but they operate very differently.
Kalshi: Regulated and Centralized
Kalshi was founded in 2019 by Brazilian-born Luana Lopes Lara and Tarek Mansour. Their goal was to build a fully regulated platform where users could legally trade event-based contracts in the United States.
Kalshi operates under the supervision of the Commodity Futures Trading Commission (CFTC), which regulates U.S. derivatives markets. That means Kalshi’s contracts are officially recognized as financial derivatives rather than gambling products.
This regulatory approval gives Kalshi a major advantage in terms of legitimacy, especially among institutional investors and U.S. users who want compliance clarity.
Polymarket: Decentralized and Crypto-Native
Polymarket, founded in 2020 by Shayne Coplan, took a different route. It operates as a decentralized prediction market built on the Polygon blockchain.
Transactions and settlements occur on-chain, without a centralized intermediary. This makes Polymarket accessible globally (with some geographic restrictions due to regulation), transparent, and crypto-native.
The decentralized structure appeals strongly to crypto users who prefer trustless systems and borderless access.
The 2024 U.S. Election: A Defining Moment
Prediction markets truly entered the mainstream during the 2024 U.S. presidential election.
On Polymarket alone, more than $3.3 billion was wagered on the outcome. While much of the traditional media and many well-known statisticians projected a narrow victory for Kamala Harris, Polymarket consistently showed Donald Trump as the favorite.
In the end, Polymarket proved to be the more accurate predictor.
This sparked intense debate. Were prediction markets simply gambling platforms? Or were they superior information aggregation tools?
Many analysts pointed out that prediction markets incorporate real financial risk. When people put their own money on the line, they tend to act on stronger convictions and better information.
One example cited was a survey used by a Polymarket user. The survey asked respondents not who they personally would vote for, but who they believed their neighbors would vote for. Such “second-order” polling often reduces social desirability bias and can provide a more accurate reflection of reality.
As election night unfolded, it became increasingly clear that Polymarket was outperforming traditional polls. Major global media outlets began referencing prediction market data in real time.
That moment marked a breakthrough into mainstream awareness.
Wall Street Steps In
The success did not go unnoticed.
In October 2025, Intercontinental Exchange (ICE), the owner of the New York Stock Exchange, invested $2 billion into Polymarket. This investment significantly strengthened the bridge between decentralized prediction markets and traditional finance.
The message was clear: this is no longer just a crypto experiment.
Meanwhile, Kalshi has seen explosive growth as well. Reports suggest its sports contracts alone generate over $1 billion in weekly volume.
Traditional betting companies are starting to feel the pressure as users migrate toward prediction markets, where they trade contracts against other participants rather than betting against “the house.”
Gambling or Derivatives?
Regulation remains a delicate balancing act.
Are prediction markets gambling platforms or legitimate financial derivatives exchanges?
The distinction matters enormously.
Traditional sportsbooks operate under gambling laws. Prediction markets like Kalshi operate under derivatives regulation via the CFTC.
This regulatory framing allows prediction contracts to exist as financial instruments rather than casino products. But the line can appear thin, especially to policymakers.
As volumes continue to rise, regulatory scrutiny is likely to intensify.
Crypto Exchanges Join the Race
The growth has not gone unnoticed by crypto exchanges and fintech companies.
Several major players have entered the space:
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Coinbase launched its own prediction market in partnership with Kalshi.
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Gemini secured a CFTC license in late 2025 to offer prediction contracts.
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Plus500, known in Europe as a CFD broker, launched its own prediction market for U.S. futures clients, also in collaboration with Kalshi.
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Crypto.com spun off its own prediction market platform, called OG, operating under its CFTC derivatives license.
Crypto.com reported that trading volume on its prediction market grew 40x in just 6 months, highlighting the explosive momentum in the sector.
Why Are Prediction Markets Growing So Fast?
Several factors explain the rapid expansion:
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Distrust in traditional institutions: Many users believe prediction markets aggregate information more efficiently than media polls or analyst forecasts.
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Financialization of everything: Markets increasingly price not just assets, but events.
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Regulatory clarity in the US: CFTC oversight provides legitimacy.
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Crypto infrastructure: Blockchain technology enables transparent and efficient settlement.
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Massive liquidity events like elections: Political cycles create high engagement and viral adoption.
Prediction markets effectively turn information into a tradable asset.
A Structural Shift in Finance?
What makes prediction markets so compelling is that they sit at the intersection of finance, information theory, and behavioral economics.
Markets are often described as the most efficient mechanism for aggregating dispersed knowledge. If that principle applies not just to stocks but to real-world events, prediction markets could become a powerful forecasting tool.
However, risks remain:
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Regulatory backlash
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Market manipulation
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Ethical concerns
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Over-speculation
Yet the growth trajectory is undeniable.
Conclusion: A New Asset Class Emerging?
Prediction markets are evolving from fringe crypto experiments into serious financial infrastructure.
With billions in trading volume, institutional backing from ICE, CFTC oversight, and adoption by major exchanges, they are rapidly gaining legitimacy.
Whether they ultimately reshape forecasting, betting, or derivatives markets remains to be seen. But one thing is clear: Prediction markets are no longer a curiosity. They are becoming a core part of modern financial markets. For early participants, they may indeed prove to be the new gold rush.
