Polymarket banner outside the New York Stock Exchange, October 7, 2025.
Kevin Stankiewicz | CNBC
Annual trading volume in prediction markets could reach $1 trillion by the end of this decade, according to a new report from Eilers & Krejcik, a research firm specializing in sports and interactive gaming.
“A number of factors, particularly legal and regulatory challenges, can slow or derail the growth of prediction markets,” Chris Grove, partner emeritus and strategic advisor at Eilers & Krajcik, told CNBC. “But the basic elements of consumer demand and a diverse array of brands looking to meet that demand are clearly in place.”
That growth will be driven by sports, which E&K predicts will account for 44% of the prediction market’s long-term volume.
The fast-growing prediction space allows users to bet on events in markets such as culture, politics, and sports. The growing popularity of platforms like Polymarket and Kalshi has prompted traditional sportsbooks to launch their own prediction platforms.
Comparing predicted trade volume to sportsbook handles or bet amounts is complicated because prediction markets count both sides of a trade as volume.
For example, if someone buys a contract for 40 cents and someone else takes a position for 60 cents, this is a trade volume of $1. In sports betting, dollar bets are strictly dollars on the handle.
E&K created a formula to convert prediction volume into handles and concluded that a mature sports prediction market could support the sportsbook-style handles that make up approximately 60% to 80% of today’s licensed and regulated online sports betting market.
Of course, online sports betting is only legal in 31 states. Prediction markets have been launched in all 50 locations.
robin hood This week we introduced additional prediction market features that allow users to trade NFL parlays and prop bets.
“Sportsbooks are definitely seeing the writing on the wall and how this could completely disrupt their business,” CEO Vlad Tenev told CNBC on Wednesday.
Fanatics partnered with Crypto.com to launch Fanatics Markets, a predictive trading service, in early December. draft kings and fan duel Each company plans to launch its own forecasting platform by the end of this month.
Currently, platforms like Kalshi robin hood, Crypto.com, Polymarket and Fanatics have raised about $10 billion, according to a Citizens analysis this week. But analysts note that “prediction markets are in the early stages of exponential expansion, with financial institutions likely to be next in line, as asset classes move from speculation to more mature parts of capital markets.”
Tenev was more specific: “We believe we are in the early stages of a prediction market supercycle.”
As the market matures, cross-selling to prospective customers is likely to diversify. After all, the way FanDuel recruits predictive customers to its online sportsbook and Ikashino is going to be very different from the way Robinhood convinces predictive traders to try stock trading.
Still, a broader trend is emerging: the merging of investing and gambling.
“There’s always been some overlap between the two, but we seem to be living in a world where gambling is becoming more and more like investing, just as investing is becoming more and more like gambling,” Grove said.
Disclosure: CNBC and Kalsi have a business relationship.
