Prediction markets are exploding in popularity, and with them, the boundary between investing and gambling is fading fast. Platforms like Kalshi and Polymarket now process billions of dollars in weekly volume, letting users bet on everything from election outcomes to pop culture moments. As money floods in and regulators step back, what started as a niche financial experiment is beginning to look like a full-blown global casino.
From Elections to Taylor Swift
Prediction markets allow users to trade on real-world outcomes by buying “yes” or “no” contracts tied to specific events. These contracts typically trade between zero and one dollar, with prices reflecting the market’s implied probability of an outcome. If a contract settles in your favor, it pays out one dollar. If not, you lose what you paid.
Unlike sportsbooks, there is no house setting odds. Traders bet directly against each other, and platforms act as exchanges that match buyers and sellers while holding funds until events resolve. Because prices are driven by supply and demand, a contract trading at 40 cents implies a roughly 40 percent chance of that outcome occurring.
The range of available bets has expanded rapidly. Users can wager on elections, weather events, sports championships, award nominations, and even niche cultural moments. That breadth, combined with real-time pricing, has drawn in retail traders looking for fast-moving opportunities.
Why Growth Suddenly Took Off
Prediction markets have existed for decades, but their recent surge traces back to the pandemic-era trading boom. Stimulus checks, zero-commission trading, meme stocks, and crypto speculation trained a new generation of traders to treat markets like games. Prediction platforms leaned into that demand with more contracts, slicker interfaces, and faster settlement.
The 2024 US presidential election poured gasoline on the trend. Polymarket and Kalshi saw billions in volume as traders bet heavily on the outcome, often contradicting traditional polling. When those markets proved directionally accurate, confidence surged and more users piled in.
Regulation also helped. Under the Trump administration, oversight loosened. Kalshi won a key court battle allowing election-related contracts, opening the door to broader offerings. The Commodity Futures Trading Commission, which regulates these platforms as derivatives exchanges, has since taken a more permissive stance, arguing that earlier restrictions were anti-innovation.
Trading, Gambling, or Something in Between
Legally, prediction markets sit in a gray zone. In the US, they are regulated like derivatives, not gambling. That allows them to bypass many state gambling restrictions and consumer protection rules. Critics argue this exposes users to risks similar to sports betting, including rapid losses, addictive behavior, and limited safeguards.
There are also concerns about manipulation and insider trading. Some contracts are easy to influence, and not all platforms require strict identity verification. Participants with advance knowledge of events may be able to exploit markets before information becomes public.
Despite the risks, financial heavyweights are embracing the space. Intercontinental Exchange invested heavily in Polymarket. Robinhood Markets $HOOD partnered with Kalshi and later announced plans to launch its own prediction market. Crypto.com, CME Group, and others are experimenting as well, while sportsbooks like DraftKings and FanDuel explore similar models.
How Big Can This Get
Prediction markets are still small compared with traditional derivatives exchanges, but growth has been rapid. More than 2 billion dollars in notional volume now changes hands weekly on Polymarket and Kalshi, more than double levels seen at the end of 2024. Together, the two platforms were valued at roughly 19 billion dollars in 2025.
Politics have played a role too. Trump Media & Technology Group announced plans to launch prediction markets through Truth Social, powered by Crypto.com. Donald Trump Jr. has advisory roles and investment ties across the sector, further intertwining politics, finance, and speculation.
Whether prediction markets become a lasting financial tool or a speculative sideshow remains unclear. What is clear is that betting on the future is no longer confined to casinos. It is increasingly woven into markets, media, and everyday life.