Prediction markets could reach $1 trillion in annual volume by decade’s end, new report says

Prediction markets could trade as much as $1 trillion in annual volume by the end of this decade, driven largely by sports-related contracts and growing participation from both fintech platforms and traditional betting companies, according to a new report from research firm Eilers & Krejcik.

Current prediction market platforms generate around $10 billion in trading volume, according to analysis from Citizens, underscoring the early stage of a sector that analysts say is scaling rapidly.

Sports are expected to be the dominant engine of growth. Eilers & Krejcik forecasts that sports-related contracts will account for 44% of long-run prediction market volume, as platforms expand offerings tied to leagues, games, and player performance.

The report cautioned, however, that legal and regulatory uncertainty could slow or disrupt expansion.

“Numerous factors, most notably legal and regulatory challenges, could delay or derail the growth of prediction markets,” Chris Grove, partner emeritus and strategic advisor at Eilers & Krejcik, told CNBC. “But the fundamental elements of consumer demand and an array of diverse brands looking to meet that demand are clearly in place.”

Comparisons between prediction markets and traditional sports betting are complicated by differences in how volume is measured. Prediction markets count both sides of a trade as volume, while sportsbook handle reflects only the amount wagered. For example, a 40-cent buyer matched with a 60-cent seller produces $1 in prediction market volume, compared with $1 in handle for a single sports bet.

Using a conversion model, Eilers & Krejcik estimates that mature sports prediction markets could support sportsbook-style handle equivalent to 60% to 80% of today’s regulated online sports betting market. Online sports betting is legal in 31 U.S. states, while prediction markets currently operate in all 50.

The rapid growth of platforms such as Polymarket and Kalshi has prompted established players to enter the space. Robinhood has rolled out additional prediction features, including NFL parlay and prop contracts, while Fanatics, in partnership with Crypto.com, launched Fanatics Markets in December. DraftKings and FanDuel are expected to introduce their own prediction platforms by the end of the month.

“The sportsbooks definitely see the writing on the wall and how this could completely disrupt their business,” Robinhood Chief Executive Vlad Tenev said.

Analysts say the sector remains in the early stages of development, with broader institutional participation likely to follow as the asset class matures.

“Prediction markets are in the early innings of exponential scaling as the asset class transitions from speculation to a more mature component of capital markets, with institutions likely coming next,” Citizens analysts wrote.

Tenev described the moment more bluntly: “We think we’re in the early stages of a prediction market supercycle.”

As platforms evolve, cross-selling strategies are expected to diverge, reflecting differences between trading-focused firms and gambling-led operators. Still, analysts point to a broader trend blurring the lines between investing and wagering.

“There’s always been some overlap between the two, but we appear to be living in a world where gambling is [becoming] more like investing just as investing is pushing further and further in the direction of gambling,” Grove said.