An Operator’s Guide to the Prediction Market Boom

Prediction markets are a new trend in global iGaming and future options industries. Platforms that let you bet on the likelihood of any event, or even create your own, have been around for a long time. One of the leaders in this space, Polymarket, launched in 2020, but they are clearly in their “prime era” right now.

Trading volumes on Polymarket and Kalshi skyrocketed from $500 million to $6 billion between June 2025 and January 2026, even as the broader crypto market was taking a hit.

Users no longer want to guess all by themselves whether we have entered a “bear crypto market” or if this is just a temporary dip; instead, they are downloading prediction market apps faster than ever. Over the past year, Polymarket downloads jumped from 30,000 to over 400,000, while Kalshi went from 80,000 to 1.3 million. Meanwhile, downloads of the Binance crypto exchange app dropped by more than half during that same time.

The market is growing at a massive rate, overshadowing traditional sportsbooks. More and more people want to bet on anything and everything without needing to understand sports rules like offsides or game sets. Operators like Underdog are already carrying out large-scale layoffs as part of a strategic shift toward prediction markets.

It feels like the tectonic plates are shifting: the kind of change where the world won’t be the same afterward. In many ways, this situation mirrors the sweepstakes casino craze of 2024–2025, when legal regulations couldn’t keep up with the hype.

We created this prediction market review so you can get your piece of this brand-new pie. Inside, you will find a detailed breakdown of the current trends, legal requirements, restrictions, and the specific risks and opportunities that matter in 2026.

What are Prediction Markets

Prediction markets are platforms that let anonymous users gamble on uncertainty and place “predictions” rather than bets.

The events can be anything. These might be the outcome of elections in any country, the passing of laws, referendums, the resignation of politicians, the results of sports matches, inflation rates, hurricanes, release dates for TV shows, epidemics, wars, and even the existence of aliens and their upcoming visit to Earth. This is a new “stock market for trends” that is evolving in the “attention economy.”

It seems this is exactly what users want because geopolitical events in the Middle East sparked a huge amount of trading on Polymarket, totaling $529 million within a few days.

Prediction market platforms are similar to futures markets, where traders bid up and down the price of a future contract based on their expectation of what the future price of the asset will be. 

In prediction markets, traders bid on the outcome of a specific event or create their own. One way or another, participants buy "yes" or "no" contracts that pay $1 if correct. 

Picture this: there is a market on "Will Team A win the Super Bowl?" You can buy "yes" shares for 60 cents each. If Team A wins, each share pays $1, which means your profit is 40 cents per share. If they lose, it’s worth $0. The 60-cent price means the crowd sees a 60% chance of victory, which is cheaper than $1 because it's not a sure thing. 

Anyone can buy or sell anytime, so the market prices self-correct as traders bet based on new info, balancing optimism and pessimism.

Types of Prediction Markets

There are a few prediction market models, which differ in their mechanisms and how often predictions are made. 

Continuous Double Auctions

This works like the stock market, by matching buyers and sellers. In prediction markets, you can buy or sell your “shares” in specific results. As that result looks more likely to happen, the price goes up; if it looks less likely, the price drops. This requires the operator to keep a ledger of each trade and make sure the final owner of each bet gets paid. 

Automated Market Makers

An AMM is used to maintain liquidity for markets when there aren’t enough individual buyers or sellers. In this system, the operator itself acts as the “house” of a casino, being a counterparty. Every time someone places a bet, the platform automatically adjusts the potential payouts based on how much money is coming in for each result. 

Play Money Markets  

Most prediction markets use real money to make sure people take their guesses seriously, but this can cause legal trouble in places where online gambling is illegal. To get around this, some platforms use virtual tokens instead of cash. Players who collect the most tokens can win prizes or other rewards. This keeps everything legal and gives users a way to trade without the risk of losing real money.

Blockchain-Based Prediction Markets  

Recent advances in blockchain have led to decentralized markets that no single company or person controls. Instead of a middleman, these platforms use smart contracts to handle the bets. They also use a community voting system to determine the final outcome.

Market Landscape and Big Players

With the huge spike in interest in prediction markets, the iGaming and fintech sectors are following the trend in two main ways: by building specialized hubs and by folding these features directly into existing super-apps. 

Despite the fact that the trend has existed for half a year, there are already a few market leaders like Polymarket, Kalshi, Robinhood, and FanDuel, who laid the market’s foundation. 

Polymarket is the most liquid and widely discussed platform in the industry. Its technology is built on the Polygon blockchain using the USDC stablecoin. To keep things fast, the order book is handled off-chain, while the actual payouts happen on the blockchain to ensure everything is transparent. Additionally, because the code is open-source, any user can check the smart contract to verify that results haven’t been tampered with.

Kalshi is the first platform in the USA issued Designated Contract Market (DCM) status by the Commodity Futures Trading Commission (CFTC). This is a fully authorized derivatives exchange, making it just as legal as the Chicago Mercantile Exchange (CME).

The company’s business model is based on transaction fees, but its real strategic edge is its focus on API trading. Unlike “closed” platforms like Polymarket, Kalshi actively shares its markets with other apps through its API. This effectively turns prediction markets into an easy-to-use tool known as “Prediction as a Service.”

That is what a fantasy sports app, Sleeper, has done recently. This is one of the most popular apps in the USA with an audience of over 10 million people. At the moment, they start with sports markets, but next they plan to widen their offer with political, economic, and cultural events. Kalshi has set up similar partnerships with platforms like Robinhood, Coinbase, and PrizePicks.

While there are just a few market leaders, other operators implement this gambling activity on their own. For instance, Crypto.com follows their path running their own prediction market platform OG.com. 

Having had it for a year, management of the crypto platform found that over the last six months, weekly growth in this area hit a 40x increase. That is why they decided to split prediction markets into their own separate platform. 

Unlike platforms like Polymarket or Kalshi, the key feature of OG is margin trade. This means users won’t just be limited to their own cash; they can use borrowed funds to make their predictions. As a result, it increases both the potential winnings and the risks. While this is a new approach for prediction markets in the USA, it is a format that is already quite common on crypto platforms.

Prediction as a service basically means turning prediction markets into a standard feature inside larger platforms.

Users no longer need to jump between different apps; making predictions becomes a natural part of their financial or social life. Current online betting operators add prediction markets by Kalshi right into their app, enhancing user experience. Instead of opening a new app to bet on an election or a central bank interest rate, they can place bets and make predictions in the same app they already use.

A clear example is the Sleeper case mentioned earlier. During quiet periods in the sports calendar, user engagement usually drops. By integrating predictions for events, these platforms can keep users active all year round.

Recently, Trust Wallet built Polymarket directly into its app across 12 different networks, including Polygon, Ethereum, and Arbitrum, so users don’t have to switch to an outside browser. Before this, Trust Wallet connected with Myriad using the same method, and it plans to add Kalshi in the future.

This trend is blurring the line between “gaming” and “investing.” On platforms like Robinhood and Coinbase, these prediction markets are presented as “event trading.” For today’s everyday investor, buying a contract on an election result or an interest rate change feels just as legitimate as buying stocks or cryptocurrency.

This integration provides prediction markets with a huge flow of money from regular users who value the convenience of using one single wallet and a familiar interface.

After all, it proves that prediction markets can be organically implemented as an additional service in any digital product, whether it’s an online casino or a sportsbook. 

Regulatory Compliance

For now, operators do not need to obtain a gambling license to offer prediction markets. This applies to the majority of jurisdictions, just because the authorities have not decided how to treat the activity. 

But the faster this sector is evolving, the more closely authorities all over the world are watching it. 

Recently in the UK the Gambling Commission (GC) decided to consider prediction markets as a regulated gambling activity. From then, operators of these markets need to apply for a Betting Intermediary license. They also must follow all standard rules regarding player protection and crime prevention. 

Speaking of the market leaders, they are “in trouble” in the UK, since Kalshi-style binary options are banned for retail clients and treated as high-risk derivatives, and Polymarket is being geo-blocked. 

Similar restrictions are common for the EU as well. France, Belgium, Portugal, Hungary blocked Polymarket as unlicensed gambling. The Dutch Gaming Authority, the KSA, has penalized Polymarket for operating in the Netherlands without a license and classified the site as “games of chance.” To offer these services in the Netherlands, the company must have a specific permit. Polymarket doesn’t have one. 

New Zealand has outlawed prediction platforms as well. The local authority, the DIA, has considered prediction platforms as gambling operators. That means they can’t operate within New Zealand without a license. Meanwhile, the country has no crackdown system to block illegal sites, intending to monitor them closely. Furthermore, gambling regulations are still being developed, so prediction market operators can obtain a license when it is done. 

At the moment, these are the only jurisdictions where prediction platforms are prohibited or restricted. That means that operators can offer the activity in the rest of the world, at least in jurisdictions where a local license isn’t required. 

Germany didn’t block the platforms but took them under evaluation as potential gambling. In Spain and Switzerland, all prediction markets platforms are open. 

Theoretically operators can obtain an offshore license to provide users with these services. However, as of March 2026 there is a single offshore jurisdiction, Liberia, which has declared that their international license now covers prediction markets. Being the first license for prediction markets, the jurisdiction is quite new, released at the end of 2025 and has an emerging reputation. 

Speaking of the USA, the prediction markets industry is increasingly regulated as federal event contracts overseen by the Commodity Futures Trading Commission (CFTC). This sets them apart from state-level gambling laws. 

If you are planning to compete with Polymarket and Kalshi by running a prediction markets platform based in the U.S., you have to register as a Designated Contract Market (DCMs) and meet rigorous CFTC-mandated core principles. 

The Risks and Barriers to Entry

Moving from traditional online gambling to prediction markets seems like a natural and even obvious step: the audience is similar, the thrill is the same, and the hype around Polymarket and Kalshi is currently through the roof. Despite looking the same on the surface, this is a completely different animal. 

The main risk is regulatory uncertainty. Unlike online casinos and sportsbooks, where the legal “rules of the game” are somewhat defined, prediction markets are still in the grey zone. They might be considered as gambling or as financial derivatives, it all depends on the exact jurisdiction. 

Operating prediction markets does not require a gambling license yet in the majority of jurisdictions. But that doesn’t mean operators don’t need any paper or registration to run those kinds of activities.

In the USA, prediction markets aren’t treated like simple betting; they are classified as “binary options.” This means platforms have to register with the CFTC, a process that is much tougher than just getting a gambling license or a legal opinion required for sweepstakes casinos.

Even so, the regulatory legislation is still uncertain. More than ten U.S. states have filed lawsuits against the prediction market operators, questioning whether federal law overrules individual state gambling rules. The big legal question is whether sports results can legally be traded as “event contracts.” 

While many are waiting for the U.S. Supreme Court to give a final answer, it could take years. In the meantime, we expect a mix of conflicting court rulings and new bans, which will likely keep the market split up and confusing.

Meanwhile, operators active in both regulated gambling and prediction markets may face cross-licensing scrutiny. If state regulators think a company is using prediction markets service as a loophole to get around gambling laws, they might investigate all of that company’s licenses. 

Speaking of the global landscape, prediction markets are becoming popular with users because they cover controversial topics like politics, which is the biggest driver of the current hype. Regulators all over the world view these markets very negatively. For instance, the UK already banned them. 

Entering this “field” means understanding that the rules of the game can change quickly, therefore operators will have to move fast to adapt to new standards. 

Key Takeaway and Forecasts to 2030

Despite the legal challenges, the business potential of prediction markets is clear. In the USA, by operating under the federal oversight of the CFTC, they currently offer something traditional bookies have wanted for a long time: the ability to reach the entire country without having to deal with 50 separate state licensing processes.

Early results show a lot of interest in states with huge populations, like California and Texas, where sports betting is still not regulated by the state. This creates a powerful way to bring in new customers.

The current U.S. administration’s supportive attitude toward this trend is fueling hope for the continued growth of prediction markets. 

From a business perspective, this model is very attractive for a few reasons:

• Tax Benefits: Because event contracts are regulated at the federal level, they currently don’t have to pay the state-level gambling taxes that traditional bookies do.
• Faster Launch: They use self-certification systems, which let platforms list new types of bets much faster.
• Fewer Restrictions: At the moment they face much lighter rules regarding advertising and age limits compared to state-licensed sportsbooks.

Furthermore, there are plenty more opportunities for B2B operators handling payments, ID checks, and location and data tracking, because this is a big new market with a high volume of transactions.

And that is true not just in the USA, but across the rest of the world. The prediction markets industry is on the rise, and it’s the best time to be an early mover. 

Moreover, there are forecasts that together all prediction markets platforms will reach a trillion dollars in trading volume by 2030, which is just four years away.