Analysts at Bernstein predict that prediction markets will reach a trading volume of $1 trillion by 2030, despite sports betting not being the primary driver. In a recent note, they highlighted that while sports-related event contracts currently represent 62% of volumes on platforms like Polymarket and Kalshi, this share is expected to decrease to 31% as institutions explore other types of events.
Bernstein anticipates an institutional shift towards economic, business, and political contracts. This transition allows investors to gain more direct exposure to various events, with corporations and insurance companies likely using prediction markets for risk management. Currently, professionals use derivatives such as interest-rate derivatives and credit default swaps for managing policy outcomes; however, these offer only indirect exposure.
The analysts noted that event contracts eliminate the mismatch risks between policy outcomes and hedging instruments. This shift broadens access to previously niche market instruments. Revenue forecasts indicate prediction markets could generate approximately $10.8 billion by 2030, marking a more than 2,000% increase from $500 million in 2025. Polymarket recently started charging fees on some markets as of April.
Trading volumes differ between platforms: sports betting accounts for 42% of Polymarket’s and 78% of Kalshi’s activity. Kalshi set a record with $2.7 billion in sports wagers last week during the Masters Tournament, one of golf’s major championships.
Wall Street firms have embraced prediction markets following their rise to prominence during the 2024 presidential election. However, some states have attempted to restrict access by classifying them as gambling, prompting CFTC intervention for federal regulation. Tradeweb has partnered strategically with Kalshi, while ICE invested $1.6 billion in Polymarket to enhance distribution.
Jump Trading, a high-frequency trading firm, acquired stakes in both Kalshi and Polymarket through liquidity provision agreements. Susquehanna International Group is also engaging with prediction markets using strategies like mispricing detection and cross-platform arbitrage. Bernstein underscores the significance of these firms’ involvement, indicating that prediction markets are evolving from hobbyist activities to significant players in high finance.