Prediction markets reached $28.4 billion in monthly trading volume in May 2026, according to data compiled by Pew Research Center and The Block, up from less than $5 billion in September 2025. The segment has generated over $60 billion in cumulative 2026 volume through May, per Wintermute's marke...
"Prediction markets have the demand profile of a major asset class but the liquidity profile of an early-stage one." — Jake Ostrovskis, Head of OTC Trading, Wintermute
Prediction markets reached $28.4 billion in monthly trading volume in May 2026, according to data compiled by Pew Research Center and The Block, up from less than $5 billion in September 2025. The segment has generated over $60 billion in cumulative 2026 volume through May, per Wintermute's market entry announcement on May 29. Kalshi and Polymarket together control an estimated 85–95% of global prediction market flow.
The capital formation cycle has accelerated accordingly. Kalshi closed a $1 billion Series F at a $22 billion valuation in May, doubling its $11 billion Series E from five months prior. Polymarket is seeking $400 million at a $15 billion valuation, per Bloomberg, after ICE — parent of the New York Stock Exchange — took a $1 billion stake at $9 billion in October 2025. Combined, the two platforms are now valued at $37 billion, roughly equivalent to the market capitalization of Intercontinental Exchange itself.
Jupiter, the largest decentralized exchange aggregator on Solana, launched Forecast on June 4, introducing a competing market-maker model (Prop AMMs) to prediction market liquidity. Wintermute began providing two-sided quotes across Kalshi and Polymarket the same week. ARK Invest sized the medium-term opportunity at $1–5 trillion. But a regulatory collision between federal derivatives law and state gambling statutes remains unresolved, with Minnesota enacting a felony ban on prediction market operations effective August 1, 2026.
Monthly transaction volume across prediction markets grew from $1.2 billion in early 2025 to over $20 billion by January 2026, according to TRM Labs' on-chain analysis published March 27. By May 2026, that figure reached $28.4 billion, per data aggregated by Pew Research Center.
The growth was not driven solely by existing users trading more. TRM Labs found unique wallet counts tripled to 840,000 in the six months through February 2026. Mid-frequency traders (11–1,000 fills) and high-frequency market makers accounted for roughly 80% of volume, while casual and first-time participants remained a modest share.
Category composition has shifted materially from the political-betting origins of these platforms. According to Pew Research data published May 27, sports now accounts for 80% of total volume on Kalshi and 39% on Polymarket. Crypto-related markets represent 7% on Kalshi and 20% on Polymarket. Politics — the category that first attracted mainstream attention during the 2024 U.S. presidential election — has fallen to 4% of Kalshi volume and 32% on Polymarket.
For context, legal U.S. sportsbooks processed approximately $14 billion per month in 2025. Prediction markets, at $28.4 billion monthly, now exceed that figure by more than 100%.
Bernstein analysts project prediction market volumes will reach approximately $240 billion for full-year 2026 and $1 trillion annually by 2030.
Two platforms dominate. In May 2026, Kalshi processed $17.3 billion (approximately 61% market share) while Polymarket handled $8.4 billion. The remaining volume is split among smaller venues and on-chain alternatives.
The platforms occupy distinct niches. Kalshi operates as a CFTC-regulated designated contract market, offering event contracts denominated in U.S. dollars with traditional brokerage integrations. Its user base skews institutional: annualized institutional trading activity rose 800% over six months through May 2026, per the company's Series F disclosure.
Polymarket operates on Polygon (an Ethereum Layer 2), settling trades in USDC. It launched a separate CFTC-regulated venue — Polymarket US, operated by QCX LLC — on December 3, 2025 for U.S. residents. In April 2026, Polymarket International processed $9 billion versus $1.3 billion on the U.S.-regulated venue, indicating the bulk of volume remains offshore.
In April 2026, the CFTC granted Polymarket an Amended Order of Designation, clearing the path for the international platform to directly onboard U.S. customers under full federal supervision, including enhanced surveillance, market-supervision standards, and Part 16 reporting obligations.
Kalshi controls 89% of the U.S.-regulated prediction market, according to CoinDesk data from April 2026.
The velocity of capital raises in this sector has no recent precedent in fintech:
| Platform | Round | Date | Amount | Valuation | |----------|-------|------|--------|-----------| | Kalshi | Series E | Dec 2025 | $1B | $11B | | Kalshi | Series F | May 2026 | $1B | $22B | | Polymarket | ICE strategic stake | Oct 2025 | $1B | $9B | | Polymarket | New round (in progress) | Apr 2026 | $400M | $15B |
Kalshi's Series F was led by Coatue, with Sequoia, Andreessen Horowitz, Paradigm, IVP, Morgan Stanley, and ARK Invest participating. The company disclosed annualized revenue exceeding $1.5 billion, with annualized trading volume climbing from $52 billion to $178 billion in six months — a 3.4x increase.
Polymarket's lower relative valuation ($15B vs. $22B) reflects its later entry into U.S. fee collection. The platform only began charging fees to U.S. customers in late 2025 via its regulated subsidiary.
Combined, the two platforms have raised over $3.4 billion in disclosed funding since October 2025. The $37 billion combined valuation exceeds the market capitalizations of Coinbase ($32B as of early June 2026) and Robinhood ($35B), placing prediction markets among the most richly valued segments in financial technology.
Jupiter launched Forecast on June 4, 2026, billing it as Solana's first fully native prediction market. The product introduces a structural alternative to the central limit order book (CLOB) model used by Kalshi and the single-AMM pool model used by Polymarket.
Forecast uses proprietary automated market makers (Prop AMMs) — independent market-making agents that post competing quotes across available markets. When a user submits a trade, Jupiter's routing engine checks all active Prop AMM quotes and executes at the best available price. The model borrows from Jupiter's core DEX aggregation architecture, where competing liquidity sources are already the norm for token swaps.
The product launches with 15-minute crypto price prediction markets and integrates into Jupiter's existing Jup Predict interface. Jupiter stated that Forecast "complements rather than competes with Polymarket" and will "continue to maintain close collaboration with Polymarket and support its markets."
The significance is structural: Forecast introduces DeFi-native competing liquidity to a market currently dominated by centralized venues. If Prop AMMs deliver tighter spreads on crypto prediction markets — where Polymarket's AMM pools often show wide bid-ask spreads during low-activity periods — the model could attract volume from existing platforms. The approach directly addresses Wintermute's observation that prediction markets have institutional-grade demand but early-stage liquidity.
Wintermute, one of the largest crypto market makers by volume, announced on May 29 that it would begin providing two-sided liquidity across event contracts on Kalshi and Polymarket. The firm cited $60 billion in cumulative 2026 event-contract volume as the trigger for entry.
The move is notable because Wintermute brings institutional-grade market-making infrastructure — the same systems it uses to quote crypto spot and derivatives markets — to prediction market order books. According to Wintermute, event contracts "price real-world uncertainty directly, rather than through proxies such as equities, rates, currencies or crypto assets."
ARK Invest published a report in April 2026 sizing the prediction market opportunity at $1–5 trillion in the medium term (3–5 year horizon). The thesis: as trust in traditional forecasting institutions declines, demand for "signal-rich, crowd-sourced pricing" should grow. ARK frames prediction markets not as a gambling alternative but as "the future of financial infrastructure" — instruments that enable hedging against specific real-world catalysts rather than broad asset class exposure.
The entry of institutional market makers and the ARK framework together suggest that prediction markets are transitioning from a retail-speculative phase to an infrastructure phase, where liquidity depth and regulatory clarity become the competitive moats.
The regulatory landscape is fractured. At the federal level, the CFTC has asserted jurisdiction over prediction markets as event contracts under the Commodity Exchange Act. CFTC chair Summer Mersinger has stated she will treat prediction markets as financial products, arguing that most users are not participating for "entertainment."
On March 12, 2026, CFTC staff issued an advisory on sports-related event contracts, including warnings about manipulation risk. The advisory stopped short of banning such contracts but signaled heightened scrutiny.
At the state level, the picture is adversarial. Thirty-nine states and Washington, D.C. have legalized sports betting under their own licensing, tax, and market frameworks. Minnesota enacted a felony ban on prediction market operations, effective August 1, 2026, which is already facing legal challenges from both Kalshi and the CFTC itself.
The core legal question: are sports-related event contracts federally regulated financial instruments (governed exclusively by the Commodity Exchange Act and the CFTC), or are they sports betting products subject to state gambling law? Platform operators argue the former. State gaming commissions and the sportsbook industry argue the latter.
According to Stanford Law School's analysis published April 30, 2026, the growing consensus expects a circuit split on this question, with eventual resolution by the Supreme Court. The timing is uncertain, but the financial stakes are material: sports contracts account for 80% of Kalshi's volume. A ruling that subjects sports event contracts to state-by-state gambling regulation would eliminate the majority of Kalshi's current revenue.
A separate study from Citizens JMP, published May 29, found that prediction market "combo" contract users lose at higher rates than traditional parlay bettors — data that state regulators may use to argue for gambling-style consumer protections.
The utility case for prediction markets rests on their ability to generate accurate probability estimates. The evidence is mixed.
According to Fensory's analysis, Polymarket demonstrates a 73% accuracy rate across resolved markets since 2023, outperforming traditional polls by 8 percentage points in political forecasting. Performance varies by category: binary political outcomes show 81% accuracy, while multi-outcome entertainment markets drop to 62%.
A Vanderbilt University study published in January 2026 found significant performance gaps between platforms, with PredictIt achieving 93% accuracy versus Polymarket's 67%.
More critically, a study covered by CoinDesk in April 2026 found that just 3% of traders drive Polymarket's accuracy — a small minority of informed participants generating the bulk of price discovery. This challenges the "wisdom of crowds" narrative and suggests that prediction market accuracy is closer to an "informed minority" model than a democratic aggregation mechanism.
Researchers also found that arbitrage opportunities peaked in the final weeks of the 2024 presidential campaign, indicating that information was not being synthesized efficiently across platforms — a hallmark of market immaturity. As volume grows and institutional market makers like Wintermute enter, arbitrage gaps should narrow, potentially improving cross-platform price convergence.
Prediction markets have reached the scale of a standalone financial vertical. At $28.4 billion in monthly volume, the segment now processes more notional value than the entire U.S. legal sportsbook industry. The $37 billion combined valuation of its two leading platforms places prediction markets in the same tier as major crypto exchanges and online brokerages.
The infrastructure layer is maturing rapidly. Jupiter Forecast introduces competing liquidity providers to on-chain prediction markets. Wintermute brings institutional market-making depth to centralized venues. The capital raises from Sequoia, Coatue, a16z, and ICE signal that mainstream finance views this as a durable market structure, not a speculative cycle.
The unresolved variable is regulation. An estimated 80% of Kalshi's volume — and a significant share of the sector's $37 billion valuation — depends on sports event contracts remaining classified as CFTC-regulated financial instruments rather than state-regulated gambling products. Minnesota's felony ban and the expected circuit split create binary outcomes for the industry's dominant revenue category. The Supreme Court's eventual ruling will determine whether prediction markets remain a federal asset class or fracture into a state-by-state regulatory patchwork analogous to sports betting.
The economic value generated by prediction markets is real: $1.5 billion in annualized revenue at Kalshi alone, institutional capital formation at venture-stage velocity, and a liquidity infrastructure that increasingly resembles traditional derivatives markets. Whether that value accrues to a regulated financial instrument framework or is redistributed through state gambling commissions remains the sector's defining open question.