Prediction markets are already a multibillion-dollar sports wagering market — and regulators can't agree what they are
Kalshi and Polymarket's combined sports-related trading volume grew roughly 5x between September 2025 and April 2026. At least 11 states have tried to shut them down as unlicensed sportsbooks; the platforms say federal law already covers them.
Updated September 22, 2026
Key findings
- Combined monthly trading volume on Kalshi and Polymarket grew from under $5 billion in September 2025 to roughly $24 billion in April 2026 — about a 5× increase in seven months.
- Kalshi's trailing-year volume through February 2026 reached $39.7 billion (about 87% sports-related); Polymarket's was close behind at $36.2 billion.
- At least 11 states have issued cease-and-desist orders against prediction market operators; outcomes in court have been mixed.
- Estimates of lost state sports-betting tax revenue range from about $600 million (MultiState) to over $1.3 billion for 2025–2026 (American Gaming Association) — the two estimates use different methodologies and aren't directly comparable.
- The CFTC issued an Advance Notice of Proposed Rulemaking on prediction market event contracts on March 16, 2026, with public comments due April 30, 2026.
Sports prediction markets — platforms where users trade contracts on the outcome of games rather than placing a traditional bet — have gone from a niche curiosity to a wagering volume rivaling parts of the licensed sports betting industry, in well under a year. Kalshi and Polymarket, the two largest platforms, are regulated federally as derivatives exchanges by the Commodity Futures Trading Commission (CFTC), not as gambling operators by state gaming boards — a distinction the platforms treat as settled law and most state regulators dispute entirely.
How big the market actually is
Kalshi's trailing-year trading volume through February 2026 reached $39.7 billion, with roughly 87% of that — about $34.6 billion — tied to sports contracts. Polymarket's trailing-year volume over the same window was $36.2 billion, putting the two platforms within about $3.5 billion of each other on headline volume, though Polymarket's sports share is reported as lower than Kalshi's without a precise published figure. During the NFL season, sports-related contracts made up roughly 90% of everything traded on Kalshi. Neither platform publicly discloses open interest, active trader counts, or unique account numbers, which limits how precisely the market's real depth can be measured from outside.
| Metric | Kalshi | Polymarket |
|---|---|---|
| Trailing-year volume (to Feb. 2026) | $39.7B | $36.2B |
| Sports share of volume | ~87% | Lower, unspecified |
| Sports share during NFL season | ~90% | Not reported |
College basketball alone illustrates how fast this grew: Kalshi took in $1.9 billion in college basketball contracts in February 2026 alone — a single-sport, single-month figure that gives a sense of scale heading into March Madness, where the American Gaming Association separately estimated $3 billion in regulated sportsbook handle on the NCAA tournament.
States say it's gambling. The platforms say it isn't.
At least 11 states have issued cease-and-desist orders against prediction market operators offering sports-outcome contracts, arguing the contracts function as unlicensed sports betting regardless of the federal derivatives label. The results in court have been mixed rather than one-sided. Nevada's Gaming Control Board issued a cease-and-desist that a Ninth Circuit panel left standing after dismissing Kalshi's appeal. Kalshi won temporary judicial relief allowing it to keep operating in New Jersey, Connecticut, and Tennessee while litigation continues, but lost preliminary injunction requests in Maryland and Ohio — meaning those states' enforcement actions were allowed to stand, at least for now.
State legislatures are moving too: 11 states introduced prediction market legislation in 2026, with Hawaii and Kentucky furthest along but pursuing opposite strategies — one toward an outright ban, the other toward bringing the activity into a taxed framework instead. Tennessee and California have focused more narrowly on anti-corruption measures, such as rules aimed at preventing insider manipulation of contract outcomes, rather than a blanket ban or licensing regime.
The revenue question regulators keep raising
Two separate estimates capture how much state tax revenue is at stake, and they aren't directly comparable. MultiState, an organization tracking state legislation, put lost state sports-betting tax revenue at roughly $600 million as wagering activity shifts from taxed, licensed sportsbooks to untaxed prediction market contracts. Separately, the American Gaming Association's own estimate — cited in its analysis of a rare flat year for legal NFL wagering — put the figure above $1.3 billion for 2025–2026 combined. The gap likely reflects different scopes and methodologies rather than one estimate being simply wrong; neither organization has published the full model behind its number.
Federal regulators are reconsidering the rules
The Commodity Futures Trading Commission issued an Advance Notice of Proposed Rulemaking on March 16, 2026, specifically addressing event contracts — including sports-outcome contracts — with a public comment deadline of April 30, 2026. An ANPRM is an early-stage step that signals the CFTC is reconsidering its approach, not a final rule; any actual rule change would still need to go through a full notice-and-comment rulemaking process afterward. Congress has also taken notice: the Congressional Research Service published a policy explainer on prediction markets for lawmakers in 2026, a sign the issue has moved from a state regulatory dispute to a live federal policy question.
Why this matters for licensed sports betting
The regulatory ambiguity has real commercial consequences for an industry we've covered extensively: the AGA has directly attributed a rare flat year for legal NFL wagering — $29.5 billion in 2026, essentially unchanged from $29.4 billion in 2025 — partly to what it calls "backdoor sports betting" on prediction market platforms. If that pattern holds, prediction markets aren't just a regulatory curiosity; they're already large enough to show up in the growth numbers of a licensed industry that generated $643.7 billion globally in 2025.
How we build stories like this: Fast-moving regulatory stories like this one — where the numbers and the legal status are both still in motion — are exactly what Beacon Digital PR builds press-ready campaigns around for gambling and gaming clients. See how we approach campaigns in this niche, or book a free consultation to talk about your brand.
Frequently asked questions
How big are sports prediction markets like Kalshi and Polymarket?
Combined monthly trading volume across both platforms grew from under $5 billion in September 2025 to roughly $24 billion by April 2026 — about a 5× increase in seven months. Kalshi's trailing-year volume through February 2026 reached $39.7 billion, with Polymarket close behind at $36.2 billion.
Are prediction markets regulated as gambling?
No. Kalshi and Polymarket operate as federally regulated derivatives exchanges under CFTC oversight, not as state-licensed sportsbooks — which is exactly what state gaming regulators dispute when it comes to sports-outcome contracts.
Which states have tried to block prediction markets?
At least 11 states have issued cease-and-desist orders against prediction market operators. Nevada's gaming board issued one that a federal appeals court left standing, while Kalshi won temporary court victories in New Jersey, Connecticut and Tennessee and lost preliminary injunction requests in Maryland and Ohio.
How much tax revenue are states losing to prediction markets?
One estimate puts lost state sports betting tax revenue at about $600 million as prediction market wagering shifts outside the regulated, taxed sportsbook system — a separate, larger two-year estimate from the American Gaming Association puts the figure above $1.3 billion for 2025–2026.
What is the CFTC doing about prediction markets?
The CFTC issued an Advance Notice of Proposed Rulemaking on March 16, 2026, covering event contracts including sports outcomes, with a public comment deadline of April 30, 2026 — the clearest sign yet that federal regulators are reconsidering how these contracts should be overseen.
Methodology
Trading volume figures for Kalshi and Polymarket (combined monthly volume, trailing-year totals, and sports-share percentages) are drawn from CoinLaw's compiled prediction market statistics, which in turn aggregate platform-reported and third-party analyst figures; Beacon Digital PR did not independently verify the underlying platform data, and neither platform publicly discloses open interest or account-level figures. State legislative and enforcement details (cease-and-desist orders, court outcomes, the $600 million tax revenue estimate, and the 11-state legislative count) are drawn from MultiState's tracking of state-level prediction market regulation. The $1.3 billion two-year state tax revenue estimate is the American Gaming Association's own figure, previously cited in Beacon Digital PR's coverage of sports betting advertising trends, and is not directly comparable to MultiState's $600 million estimate since the two organizations do not publish the same methodology. CFTC rulemaking dates come from the agency's own Advance Notice of Proposed Rulemaking. All figures are current as of the cited sources' publication dates in 2026 and may be revised as litigation and rulemaking proceed.
References
- MultiState. (2026, March 19). States vs. Prediction Markets: Regulatory Battles. https://www.multistate.us/insider/2026/3/19/prediction-market-regulation-heats-up-as-states-lose-600-million-in-tax-revenue
- CoinLaw. (2026). Prediction Market Statistics 2026: Volume and Fees. https://coinlaw.io/prediction-market-statistics/
- American Gaming Association. (2026, September 4). AGA estimates $29.5 billion in legal NFL wagering; flat year-over-year growth as backdoor sports betting on "prediction markets" explodes [Press release]. PR Newswire. https://www.prnewswire.com/news-releases/aga-estimates-29-5-billion-in-legal-nfl-wagering-flat-year-over-year-growth-as-backdoor-sports-betting-on-prediction-markets-explodes-302870228.html
- Congressional Research Service. (2026). Prediction Markets: Policy Issues for Congress. Library of Congress. https://www.congress.gov/crs-product/IF13187
- ESPN. (2026). No injuries, no props: CFTC proposes prediction market rules. https://www.espn.com/espn/betting/story/_/id/49019930/cftc-proposes-rules-limiting-prediction-markets-kalshi-sports
Cite This Page
If you use these statistics or insights, please credit this page by copying the HTML below.