Prediction markets are projected to reach $40 billion in transaction volume in 2025.
The figure represents 400% year-over-year growth from approximately $9 billion in 2024.
Regulatory clarity and mainstream distribution through platforms like Robinhood are driving expansion beyond crypto-native audiences.
Analysts say the sector is evolving from betting venues into institutional information infrastructure.
What Happened
Foresight Ventures released an industry report highlighting prediction markets' rapid expansion.
The sector is positioned to eventually rival the $300 billion global sports betting industry.
Polymarket and Kalshi dominate the market with approximately 90% of trading volume.
Intercontinental Exchange, owner of the New York Stock Exchange, invested $2 billion in Polymarket at a $9 billion valuation.
The deal signals institutional recognition of prediction market data as high-quality financial signals.
Kalshi's integration with Robinhood in August 2025 provided access to 27.4 million funded brokerage accounts.
The global user base is forecast to expand three-to-fourfold, reaching approximately 15 million users by year-end.
Sports contracts currently account for 70% of total volume.
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Why It Matters
Major financial institutions are exploring prediction market probabilities for risk modeling, sentiment analysis, and event-driven products.
Bloomberg is examining integration of Polymarket real-time probability data into its platform.
Analysts describe the shift as prediction markets becoming "information engines rather than pure betting venues."
Traders could use event probabilities the same way they use prices in traditional limit orders.
The sector is transitioning from speculation to a new layer of financial and information infrastructure reflecting real-time sentiment and collective intelligence.
Kalshi operates as a federally regulated exchange under CFTC oversight, enabling nationwide distribution.
Regulatory compliance combined with mainstream distribution is outperforming crypto-native network effects in the US market.
Research firm Eilers & Krejcik projects prediction markets could reach $1 trillion in annual trading volume by decade's end.
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