Prediction Markets Go Mainstream as Platforms Push Research and Trading Innovation Forward

The world of prediction markets hit two significant milestones in late 2024 as major platforms ramped up efforts to establish legitimacy and expand their reach. On December 22, Kalshi announced the formation of a dedicated research division to advance the scientific understanding of prediction markets, while Coinbase finalized its acquisition of The Clearing Company, marking the crypto exchange’s tenth acquisition of the year and signaling its serious intent to compete in event-based trading.

These moves come as prediction markets experience explosive growth, with global trading volumes surging from under $100 million in early 2024 to over $13 billion by the end of 2025. What started as a fringe financial curiosity during the 2024 U.S. presidential election has rapidly evolved into a legitimate asset class attracting institutional investors, major media partnerships, and billions in venture capital.

Kalshi Launches Research Arm to Build Academic Credibility

Kalshi’s newly established research division represents a strategic effort to bridge the gap between live trading platforms and academic study. The company announced it would provide qualified researchers with access to its internal data—described as the largest repository of prediction market information currently available. This dataset encompasses everything from economic indicators to policy changes, tracking how collective decision-making, trading patterns, and market prices translate into real-world predictions.

The initiative includes plans to host the first-ever Prediction Market Conference, bringing together academics, professional forecasters, traders, and industry participants. Scholars from Harvard, Stanford, Yale, and the University of Chicago have already committed to participate. Registration and research paper submissions are now open to the public, marking a deliberate push to move prediction markets from the fringes of mainstream economics into serious academic discourse.

To kick off the research arm, Kalshi released an internal study comparing its inflation forecasts against Wall Street consensus estimates. The findings were striking: across a 25-month period from February 2023 to mid-2025, Kalshi’s market-based predictions had an average error rate 40% lower than traditional economist forecasts. Even more impressive, when actual data significantly diverged from expectations—during what the study called “shock” periods—Kalshi’s forecasts exceeded consensus accuracy by up to 67%.

The study revealed that Kalshi matched or beat Wall Street consensus on 85% of inflation prints when measured one week before official reports. This performance gap widened considerably during volatile periods, suggesting that prediction markets excel at capturing rapid shifts in sentiment that traditional forecasting models miss. When Kalshi’s CPI prediction varied from consensus by over 0.1 percentage points one week prior, the probability of a significant deviation in actual CPI readings jumped to approximately 80%, compared to a 40% baseline.

The reasons behind this accuracy advantage appear to stem from fundamental differences in information aggregation. Traditional forecasts typically rely on similar datasets and models across institutions, which can slow their ability to adapt to changing conditions. Prediction markets, by contrast, aggregate diverse perspectives from traders using various inputs—from industry-specific trends to alternative datasets—creating what researchers call a “wisdom of the crowd” effect. Financial incentives also matter: prediction market traders have real money at stake and are rewarded purely on accuracy, while institutional forecasters face reputational and organizational constraints that can discourage bold predictions.

Global Prediction Markets Surge Toward Trillion-Dollar Milestone

The broader prediction market sector has experienced remarkable growth across multiple platforms and regions. Polymarket, Kalshi’s primary competitor, reported cumulative trading volumes exceeding $20 billion by late 2025, with a valuation approaching $9 billion. Monthly trading volumes hit $4.1 billion in October 2024, carrying more than 247,000 weekly active traders and 72,000 daily active users—a 30% increase compared to November 2024.

Kalshi’s trajectory has been equally impressive. The New York-based platform raised $1 billion at an $11 billion valuation in December 2024, doubling its valuation in less than two months after securing $300 million at a $5 billion valuation in October. The company’s annual trading volume reached approximately $50 billion by late 2024, a massive jump from roughly $300 million the previous year. By mid-November 2025, Kalshi commanded around 60%–plus of total prediction market volume, underscoring its market dominance.

Globally, prediction market trading surpassed roughly $28 billion in 2024, with weekly peaks exceeding $2.3 billion in October. Research from specialist gaming and markets analysts projects that prediction markets could reach $1 trillion in annual trading volume by 2030. Analysts at a major U.S. bank forecast that sector-wide revenues could grow fivefold to more than $10 billion by 2030, up from approximately $2 billion in current annual revenue.

The decentralized prediction market segment shows even more explosive growth potential. Valued at roughly $1.4 billion in 2024, this subsector is projected to reach around $95.5 billion by 2035, implying a compound annual growth rate close to 47%. The broader predictive analytics market, which includes prediction markets as one component, was valued at around $14–19 billion in 2024 and is expected to grow to the $80–100 billion range by the early-to-mid 2030s.

Regional patterns reveal where future growth will concentrate. North America currently holds the largest share of predictive analytics revenue, sitting in the mid-40% range as of 2025. Asia Pacific, however, is expected to deliver the fastest growth with annual rates above 20% through the next decade, supported by rapid digital adoption, aggressive AI investment, and regulatory experimentation in markets such as China, India, Singapore, and Japan.

Prediction Markets Challenge Sports Betting and Traditional Finance

Prediction markets are carving out space by competing directly with established industries, particularly sports betting. Traditional sportsbooks thrive on volatility and emotional engagement around games and matches. Prediction markets, by contrast, monetize probability and collective insight across a much broader range of events—from political outcomes to economic indicators to cultural moments.

Surveys show that public awareness of pure-play prediction platforms like Kalshi and Polymarket still lags behind widely known brands such as Robinhood or large crypto exchanges that are entering the same space. At the same time, consumer research indicates many people see little difference between wagering on sports via prediction markets and using traditional sportsbooks, which could accelerate mainstream adoption as these lines blur.

Major sports betting operators have taken notice and rushed to launch their own prediction offerings. FanDuel, owned by Flutter Entertainment, partnered with derivatives exchange CME Group to launch a dedicated prediction product in five U.S. states, with plans for national rollout over the following year and a half. The platform lets users trade event contracts tied to equity indices like the S&P 500 and Nasdaq-100, as well as outcomes across major U.S. sports, including baseball, basketball, football, and hockey, especially in states that have not yet legalized online sports betting.

DraftKings followed with its own prediction app, rolling it out across dozens of states, including large markets such as California, Texas, and Florida. A subset of those jurisdictions also allows more traditional “sports trading,” positioning these products as a bridge between sports wagering, financial speculation, and retail investing. Both operators see prediction markets as a way to tap into states where conventional sports betting legislation still lags.

Industry analysts estimate that sports-related contracts will account for roughly 40%–45% of long-run prediction market volume. Using conversion formulas to compare prediction market turnover to traditional sportsbook handle, these analysts argue that mature sports prediction markets could eventually support an aggregate handle equal to 60%–80% of today’s regulated online sports betting market. For context, online sports betting is currently legal in just over 30 U.S. states, while prediction markets have found ways to launch nationwide through different regulatory channels.

The business models underlying these products differ in important ways. Sportsbooks charge a built-in margin on bets and generally profit when customers lose, giving them a direct economic interest in outcomes. Prediction markets, on the other hand, operate more like brokerages or exchanges: they charge transaction or settlement fees and do not take an opposing position to users. Traders buy and sell contracts among themselves at prices that reflect collective expectations rather than wagering against the house. This distinction is at the center of ongoing debates about whether prediction markets should be governed primarily by financial regulators or gambling regulators.

Institutional Adoption Signals Maturation

One of the clearest signs that prediction markets are shifting from curiosity to recognized asset class is the growing interest from institutional players. Recent surveys of global proprietary trading firms show that around one in ten are already active in prediction markets, while roughly a third more are exploring entry. Among U.S.-based firms, the combined “active or seriously considering” share climbs to around three-quarters.

The arrival of established financial infrastructure providers reinforces the sector’s perceived potential. The parent company of the New York Stock Exchange participated in a major funding deal for one of the leading decentralized platforms, signaling that prediction markets are increasingly seen as part of broader market infrastructure rather than just a consumer product. For many institutional desks, the appeal lies in “low-correlation alpha”: returns generated by forecasting event outcomes tend to be weakly correlated with mainstream assets like stocks and bonds, making them attractive diversifiers.

Media partnerships have also been a major catalyst. Kalshi announced a multi-year exclusive partnership with CNBC that will integrate real-time prediction data into the network’s television programming, digital products, and subscription services. Flagship shows such as “Squawk Box” and “Fast Money” are expected to feature dedicated prediction-market tickers alongside equity, FX, and commodity data once the integration goes live.

Just days earlier, CNN unveiled a separate deal granting its newsroom access to Kalshi’s data and adding prediction-market tickers to its live coverage around key events. These collaborations place prediction market probabilities directly in front of mainstream business and political audiences, on par with traditional polling numbers and market indicators. CNBC’s leadership has described prediction markets as an increasingly important lens for understanding how investors and executives perceive risk, while Kalshi highlights that its markets are designed to forecast concrete outcomes that drive financial decisions.

Coinbase Posts Record Earnings While Diversifying Beyond Crypto

While prediction markets gained momentum, Coinbase delivered its strongest financial performance in years. For the fourth quarter of 2024, the company reported revenue of about $2.27 billion, far above market expectations that were closer to $1.6 billion. Earnings per share reached the mid-$4 range, roughly triple widely cited analyst forecasts, and net income for the quarter came in around $1.3 billion. A sizable portion of that bottom line was helped by hundreds of millions of dollars in gains on the company’s own crypto asset holdings.

For full-year 2024, Coinbase’s total revenue more than doubled to approximately $6.6 billion. Adjusted EBITDA climbed to around $3.3 billion, giving the company back-to-back years of positive adjusted profitability. Trading volume for the fourth quarter surged to roughly $439 billion, representing triple-digit year-over-year growth and large sequential gains. Retail trading volume rose by well over 200% year-on-year to the mid-$90-billion range, while institutional activity increased by roughly 175% to the mid-$300-billion range.

The company’s subscription and services businesses also continued to scale. In the fourth quarter, this segment generated about $640 million in revenue, up mid-teens percent from the prior quarter, driven largely by growth in staking, interest on USDC balances, and custodial services. Monthly transacting users increased by nearly a quarter in just one quarter, reflecting broader engagement across the platform beyond simple spot trading.

These results coincided with a strategy shift aimed at turning Coinbase into a true multi-asset “everything exchange.” In December, the company unveiled commission-free stock trading with extended hours—24 hours per day, five days a week—designed to compete directly with commission-free brokers. The initial rollout focuses on a curated set of major stocks and ETFs, with a roadmap that calls for thousands of additional equities over time.

CEO Brian Armstrong characterized equity trading as an initial step toward a broader vision of tokenized assets. Coinbase introduced an institutional-focused tokenization platform that lets clients create and trade blockchain representations of traditional instruments like stocks. The company is positioning this as part of a larger infrastructure stack that includes cloud partners and custody, with the goal of making Coinbase a core venue for real-world asset tokenization. By early 2026, the firm also plans to launch stock perpetual futures for international clients, applying a crypto-native derivative format to traditional securities.

Coinbase Acquisition Positions Platform for Prediction Market Competition

Coinbase’s acquisition of The Clearing Company is a major piece of its move into prediction markets. The Clearing Company is a startup that focuses on compliant, on-chain infrastructure for event-based trading, and its purchase marks Coinbase’s tenth acquisition in 2025. The transaction is expected to close around early 2026, and the acquired team is slated to join Coinbase to help scale its recently launched prediction products.

Earlier in December 2024, Coinbase had already rolled out a prediction markets feature via a partnership with Kalshi, integrating event contracts directly into the main Coinbase app for U.S. users. Under this arrangement, Coinbase effectively acts as a distribution front end for Kalshi’s regulated event contracts, routing user orders and sharing in the revenue generated from trading fees. Given Coinbase’s user base—over 100 million registered accounts globally and roughly 11 million monthly active users—this integration significantly broadens the audience for prediction markets without requiring Coinbase to build a regulated exchange from scratch.

Bringing The Clearing Company in-house gives Coinbase more control over the mechanics behind prediction markets, including execution, clearing, settlement, and compliance tooling. That, in turn, strengthens its ability to compete with incumbents and experiment with new contract types, while also reducing operational reliance on third parties. Equity analysts see this as part of a larger play to smooth out Coinbase’s revenue, making it less dependent on crypto bull and bear cycles and more anchored in recurring engagement and diversified products.

At the same time, Coinbase has been extending its global derivatives footprint. The company acquired a MiFID II–licensed entity in Cyprus, allowing it to offer regulated futures and options products across the European Union under a passported license framework. With derivatives now representing the majority of global crypto trading volume, this move is critical to competing with offshore-heavy rivals and serving institutions that require regulated, onshore venues.

Regulatory Friction Remains a Central Challenge

Despite the rapid growth and rising institutional interest, prediction markets sit in a complex regulatory gray zone. In the United States, Coinbase has filed lawsuits against regulators in several states, including Connecticut, Illinois, and Michigan, arguing that state gambling regulators are overstepping by trying to police products that fall under the jurisdiction of federal commodities regulators. The company’s position is that event contracts structured as financial futures should be treated as derivatives, not gambling products.

Kalshi faces similar headwinds, including class-action litigation and state-level scrutiny over how its contracts should be classified. At the core of these disputes is a basic question: are prediction markets more like futures contracts or more like wagers? The answer affects not only which agencies oversee them but also what kinds of consumers and institutions are allowed to participate, what disclosures are required, and how capital and risk limits are set.

Major sports leagues have raised their own concerns in testimony and public statements. The NFL, for example, has argued that prediction markets, without the same set of guardrails applied to traditional state-regulated sportsbooks, could be more vulnerable to manipulation or suspicious activity. League officials emphasize that betting markets typically involve monitoring tools, data sharing with regulators, and pre-approved lists of permissible bets and limits—structures they worry may not yet be fully present around event contracts.

Globally, the regulatory picture is fragmented. In Europe, regulators often draw a sharper line between gambling and investment products, with some jurisdictions requiring separate licenses and consumer protections for any event-based wagering. The UK and parts of the EU treat many prediction products as gambling unless they meet strict criteria for being classified as financial instruments. Across Asia, attitudes vary widely: some markets, such as Singapore or certain special economic zones, are exploring controlled frameworks, while others maintain strict restrictions rooted in broader gambling prohibitions.

Retail-first trading platforms are beginning to navigate this maze proactively. Robinhood, for instance, has reportedly engaged with the UK’s primary financial regulator to discuss how a prediction market offering might be structured for European users. The conversations reflect the reality that, outside the U.S., many countries are more inclined to treat event contracts as betting products, which triggers different licensing and compliance obligations than those for securities or derivatives.

Evolution of the Prediction Market Ecosystem

As prediction markets mature, several structural and technological trends are shaping the ecosystem. One of the leading decentralized platforms has initiated a formal return to the U.S. market by purchasing a licensed derivatives exchange for over $100 million after resolving previous regulatory investigations and enforcement actions. The platform is said to be in talks with investors at valuations in the low-teens billions, reflecting both its underlying volume and expectations for future growth.

The integration of artificial intelligence and blockchain continues to play a big role. AI-based surveillance systems are being deployed to monitor trading behavior, flag suspicious activity, and support regulatory reporting, which helps address concerns about market integrity. On the infrastructure side, high-throughput chains such as Solana have made it possible to run large numbers of event markets with low latency and fees, supporting retail-scale trading. Kalshi and other operators have experimented with tokenizing event contracts on public blockchains, effectively bridging traditional regulated venues with on-chain liquidity and settlement rails.

User behavior is evolving as well. Prediction markets are attracting not only gamblers, who already have a wide variety of options in the world of crypto casinos, but also information junkies, researchers, and professionals who see forecasting as a way to express and monetize their views on politics, macroeconomics, technology, and culture. Because markets can be opened and closed around a constant stream of events, platforms can maintain engagement without relying on the traditional sports calendar. This always-on dynamic may translate into lower customer churn than in conventional sportsbooks, where bettors often disengage outside of major events or seasons.

Several high-profile market commentators have suggested that prediction markets could eventually rival or even exceed traditional equity markets in terms of turnover. While that comparison is still theoretical—given that monthly crypto trading volumes sit in the multi-trillion-dollar range and U.S. equities regularly trade above $10 trillion per month—the growth curve for prediction markets is steep. Monthly sector volume has already risen from nine figures to tens of billions of dollars within a couple of years.

Looking forward, the consensus view among many analysts and participants is that prediction markets are transitioning from a speculative niche to a core part of market infrastructure. The combination of massive underlying event-sensitive exposures—estimated in the hundreds of trillions of dollars globally—plus advancing technology, institutional capital, and maturing regulation gives the sector a very large runway. Whether prediction markets hit the projected trillion-dollar annual volume mark by 2030 or a bit later, they are already reshaping how information, uncertainty, and real-world outcomes get priced in modern finance.