Prediction markets reached $24 billion in combined monthly trading volume in April 2026, up from less than $5 billion in September 2025, according to a Pew Research Center analysis of data from The Block. The figure exceeds the $14 billion monthly average wagered through legal U.S. sportsbooks in...
"If prediction markets are regulated away, they will continue to grow offshore where there are no rules or guidelines, putting our information streams at risk of manipulation by foreign adversaries." — Michael S. Selig, CFTC Chairman
Prediction markets reached $24 billion in combined monthly trading volume in April 2026, up from less than $5 billion in September 2025, according to a Pew Research Center analysis of data from The Block. The figure exceeds the $14 billion monthly average wagered through legal U.S. sportsbooks in 2025. Kalshi and Polymarket control over 97.5% of global market share, per TRM Labs.
The growth has triggered a regulatory collision on two fronts. Internationally, five countries — Brazil, India, Indonesia, Portugal, and Spain — have blocked one or both platforms in 2026, classifying them as unlicensed gambling. Domestically, the CFTC is suing multiple U.S. states to defend its exclusive federal jurisdiction while simultaneously submitting a formal rulemaking proposal to the White House for review. Kalshi, now valued at $22 billion after a $1 billion Series F, announced on May 29 it will launch CFTC-regulated Bitcoin perpetual futures, marking its expansion beyond event contracts into mainstream derivatives.
Monthly global trading volume across prediction markets climbed from $1.2 billion in early 2025 to over $20 billion by January 2026, according to TRM Labs. By April 2026, the combined figure reached approximately $24 billion, per Pew Research. Unique wallets participating monthly more than tripled to 840,000 in the six months leading to February 2026.
Kalshi commanded $13.7 billion of April's volume — more than half of the global total. Polymarket's international platform accounted for $9 billion, with its U.S. entity adding $1.3 billion. Combined lifetime trading volume for both platforms crossed $150 billion in April 2026.
The category mix has shifted. Sports accounted for 80% of Kalshi's total volume and 39% of Polymarket's since July 2024. However, geopolitics, macroeconomics, and politics now drive the majority of new trading activity, according to TRM Labs. As Kalshi CEO Tarek Mansour noted in an a16z-hosted discussion: "Sports is bigger than it's ever been right now... but it's also a lower percentage than it's ever been. We're seeing it in politics and financials and crypto."
For context, total legal U.S. sports betting averaged approximately $14 billion per month in 2025. Prediction markets have surpassed that figure.
On May 7, 2026, Kalshi confirmed a $1 billion Series F round at a $22 billion post-money valuation, led by Coatue with participation from Sequoia Capital, Andreessen Horowitz, Paradigm, IVP, Morgan Stanley, and ARK Invest. The valuation doubled from $11 billion in five months — the company had raised a $1 billion Series E in December 2025.
Annualized trading volume more than tripled during the same period, growing from $52 billion to $178 billion. Institutional trading volume surged 800% in six months, according to Kalshi's disclosure. Annualized revenue exceeds $1.5 billion.
ARK Invest, which participated in both rounds, published a research note sizing the prediction market opportunity at $1 trillion to $5 trillion over a 3–5 year horizon, framing the sector as "a potential multi-trillion dollar asset class."
Five countries have moved to block Polymarket, Kalshi, or both in 2026:
India (May 21): India's Ministry of Electronics and Information Technology issued a formal blocking order against Polymarket, directing ISPs to cut access. The government had issued a warning on April 25 naming Polymarket and cautioning VPN providers against enabling access. India's new Online Gaming Rules took effect May 1. A blocking order for Kalshi was expected by May 23. The action uses Section 69A of the IT Act — the same provision that banned TikTok in India.
Spain (May 26): Spain's Ministry of Consumer Affairs ordered ISP-level blocks on both Polymarket and Kalshi for operating gambling services without a valid license. The ban is initially temporary, lasting three to four months while authorities investigate.
Indonesia (May 26): Indonesia's Ministry of Communication and Digital Technology blocked Polymarket specifically after it offered contracts on the early resignation of President Prabowo Subianto. Authorities classified it as a gambling site disguised as a prediction market.
Brazil and Portugal imposed similar blocks earlier in 2026. Polymarket's international platform is now restricted in 33 countries, including the United States.
The domestic regulatory conflict centers on whether prediction markets are CFTC-regulated derivatives or state-regulated gambling products. Multiple states have taken opposing positions.
Minnesota: Governor Tim Walz signed SF4760 on May 18, making it a felony to operate, host, or promote prediction markets in the state, effective August 1. The CFTC filed suit the next day. Kalshi filed its own lawsuit on May 28, arguing the law violates the Commodity Exchange Act's federal preemption and the First Amendment's advertising protections.
Kalshi has won preliminary injunctions against enforcement in New Jersey and Arizona. The CFTC has also sued Rhode Island. Nevada, Illinois, and other states have issued cease-and-desist orders against Kalshi.
The federal-state conflict has attracted White House attention. President Trump publicly backed the CFTC's authority on May 26 via Truth Social, calling it "critically important" that the agency retain "exclusive authority" over the sector.
The CFTC formally submitted its prediction markets rulemaking proposal to the White House Office of Information and Regulatory Affairs (OIRA) on May 26, 2026. The submission, filed under Executive Order 12866, initiates formal regulatory review. The CFTC declined to comment on the proposal's contents until the process concludes.
The proposal follows a March advance notice of proposed rulemaking in which the CFTC sought public comment on which event contracts may be prohibited as "contrary to the public interest" — specifically contracts tied to elections, gaming, and sports.
The CFTC operates with a single commissioner, Chairman Michael Selig, who has actively defended prediction market operators. In a May 1 letter to the Wall Street Journal, Selig stated that prediction markets "provide significant benefits to individuals, businesses, and the broader economy" and that platforms "operate as federally regulated exchanges with clearinghouses and comprehensive investor protections."
On May 13, CFTC staff issued a no-action letter relieving event contract platforms from certain swap data reporting and recordkeeping requirements, reducing compliance costs for new entrants.
On May 29, Kalshi announced it will launch perpetual futures contracts, beginning with a CFTC-approved Bitcoin perpetual (BTCPERP). The approval makes Kalshi one of the first U.S. platforms — alongside Coinbase — to offer regulated crypto perps.
Offshore perpetual futures volume grew from $28 trillion annually in 2023 to over $90 trillion in 2025. U.S. retail investors have had no regulated access to these instruments. Kalshi's perps will use eight-hour funding rate cycles, visible in transaction history.
The move positions Kalshi as a broader derivatives exchange rather than a prediction-market-only platform. Mansour stated the launch represents "Kalshi's evolution from prediction market leader to next-gen derivatives exchange."
DraftKings filed its first event contract templates with the CFTC through its DKeX exchange entity on May 22, covering "GAMEPROPERTY" and "GAMEWIN" contract classes with listing scheduled after May 27. DKeX is registered as a Designated Contract Market (DCM) — the same federal license type held by Kalshi.
The DCM framework allows operators to offer event contracts under a single federal license without securing individual state sportsbook approvals. Sporttrade, another entrant, announced plans to shut down sportsbook operations in five states to transition fully to the CFTC model.
The regulatory arbitrage is notable: operators moving from state-licensed gambling frameworks to federal derivatives oversight, collapsing dozens of state licensing requirements into one.
The SEC delayed 24 prediction market ETFs that were scheduled to begin trading in May 2026. Affected issuers include Roundhill Investments, Bitwise, and GraniteShares. The funds were designed to provide ETF exposure to contracts covering elections, economic data, and other events.
The SEC cited unresolved concerns about pricing models, risk disclosures, and settlement mechanics. Regulators questioned whether disclosure documents adequately communicate the risks of total loss and settlement disputes. The delay mirrors the multi-year review process the SEC applied to Bitcoin ETFs before approving spot products in January 2024.
Industry analysts characterize the delay as temporary, driven by the SEC's need for additional information on fund structure rather than outright opposition.
TRM Labs analysts observed behaviors that warrant scrutiny: coordinated wallets entering positions ahead of major news, accounts funding once to place a single high-conviction bet and exiting immediately after resolution, and thin markets where a single participant dominates pricing.
Mansour acknowledged in an April 2026 Axios interview that "fast-growing prediction markets will attract fraud and insider trading" but stated investigators will "inevitably" expose bad actors.
The U.S. Senate passed a resolution banning senators and their offices from trading on prediction markets. Mansour endorsed the measure, noting Kalshi already blocks members of Congress and enforces insider trading rules.
Prediction markets have transitioned from a niche curiosity to a $24-billion-per-month market in under a year. The economics are clear: Kalshi's $1.5 billion annualized revenue on a two-sided fee model demonstrates that event contracts generate real revenue at scale.
The regulatory picture is fractured. The CFTC claims exclusive authority and is actively litigating against states. Five countries classify the same products as illegal gambling. The SEC is delaying related ETFs. Three regulatory bodies are applying three different frameworks to the same underlying activity.
The expansion into perpetual futures signals that Kalshi and its competitors view event contracts as a beachhead, not a ceiling. The question is whether the regulatory infrastructure — federal preemption in the U.S., outright bans abroad — can stabilize before the market outgrows it. Based on current volume trajectories, the sector is adding users and capital faster than regulators can write rules.