The US market for sports-related event contracts is on track to reach approximately $1.1tn in annual trading volume, according to analysis from Bank of America (BofA).
This conclusion is another sign of the accelerating rise of prediction markets and their growing overlap with traditional sports betting. It also reflects rapid expansion driven by a distinct regulatory structure compared to that of sports betting.
Whereas state-issued licenses enable sports betting businesses to operate legally and with government protection, prediction markets have the option to run as a regulated futures market via the CFTC or to benefit from international liquidity pools.
Such an approach ensures that platforms can reach economies of scale across the country without having to seek out approval state-by-state, which has served as an evident catalyst to growth.
According to BofA’s estimate of 1% transaction fees charged by prediction market platforms, such a market would be expected to produce around $10bn in revenues annually.
This estimate is very similar to figures predicted by leading sportsbook operators like DraftKings, indicating that prediction markets will soon be reaching similar levels of scale.
Domestically speaking, Kalshi remains the industry leader, taking 90% of US prediction market transactions.
According to the report, sports-related contracts represented 79% of Kalshi’s trading volume in March. By contrast, Crypto.com, identified as Kalshi’s closest competitor within the US, holds only about 4% of the market.
Offshore rival Polymarket was largely excluded from the analysis, as the focus remained on regulated domestic activity.
All uphill from here
The growth trajectory of prediction markets has drawn comparisons to the early years of legalised sports betting in the US. Industry observers often refer to a sector’s “genesis year” as the first full calendar year following a major regulatory shift.
For sportsbooks, that milestone came in 2019 after the repeal of PASPA. For prediction markets, 2025 marked a similar turning point following a court decision involving Kalshi and federal regulators.
In that first full year, prediction markets recorded approximately $63.5bn in trading volume. This figure stands in stark contrast to the $13.34bn reported by regulated sportsbooks in 2019, illustrating a markedly faster scaling curve.
The disparity is partly explained by the national accessibility of prediction markets and their integration with financial trading systems, which enable higher-frequency participation.
Analysts note, however, that a portion of prediction market volume is driven by automated liquidity providers rather than retail participants.
Even so, the speed at which these platforms are approaching financial maturity remains a salient development, with trading volumes expanding in a single year to levels that took sportsbooks several years to approach.
Revenue mechanics also differ sharply between the two models. Prediction markets operate on a peer-to-peer basis and typically generate income through transaction fees rather than a traditional betting margin.
With fees averaging around 1%, compared with sportsbook holds closer to 7.5%, platforms must process significantly higher volumes to achieve similar revenue outcomes.