With a government shutdown, looming elections, and a smorgasbord of sports featuring midseason football, postseason baseball, and hockey, prediction-market volume surged to an all-time high of $2 billion last week, as first reported by Decrypt.
The data, compiled by Dune Analytics, which recently began tracking trades on the federally regulated platform Kalshi, marks a major milestone for the industry. The question now: Was last week an outlier or is this the new baseline for prediction markets?
Sports lead prediction market surge
A closer look at the numbers reveals a trend that, to industry watchers, is no longer surprising: the majority of the volume came from sports trading.
On Polymarket, $414.7 million in volume accrued via sports, $322.6 million from politics, nearly $200 million from Crypto and $67 million from pop culture.
Meanwhile, Kalshi’s action was dominated by sports which accounted for $866.5 million of its total trading volume, followed by a distant $26.6 million in crypto and $25 million in politics.
Polymarket gains ground on Kalshi
The more interesting development, however, is that Polymarket actually caught up to and surpassed Kalshi after trailing their biggest competitor for seven consecutive weeks, meaning Kalshi has led the space in trading volume for all of the football season, until now.
This shift is significant given that Polymarket U.S. has not officially launched for American users but could do so any day. The platform will reportedly launch with only sports event contracts, but as the numbers show, that focus alone should provide a massive boost to a platform that is currently only available outside of the U.S. (save for traders circumventing restrictions via VPNs).
Whales vs. small time traders
While Polymarket recaptured weekly volume, Kalshi still dominated in transactions, outpacing its rival with $3,575,478 trades versus Polymarket’s $2,586,903.
This split suggests a difference in user base for the time being:
- Kalshi’s sports event contracts are available nationwide to U.S. citizens 18 and older, meaning the platform likely has a higher number of “small-time” retail users, including Robinhood users, placing more frequent but smaller trades.
- Polymarket, whose main platform runs on blockchain technology and requires deposits in the USDC stablecoin, is likely home to more “whales” with deeper pockets, some of whom may be tied to the crypto industry.
The surge of heavy activity reportedly led to service outage for Kalshi during college football Saturday. Despite the technical difficulty, Kalshi still registered week-over-week growth, a positive sign following a minor dip the previous week that may have been attributed to sub-optimal game scripts.
What’s next for prediction market industry?
With the NBA season tipping of Tuesday night, the World Series starting on Friday, conference action heating up in college football, which means, closer, more tradable live games than during the early weeks of the season, and of course political trading picking up ahead of of Election Day on Nov. 4, it’s plausible the numbers continue to grow barring an legal setbacks as a number of states mount court battles against sports event contracts.
Polymarket’s impending U.S. launch should add fuel, as the platform carries massive brand recognition.
Expect both platforms to push full steam ahead on user-acquisition efforts, too, after recent fundraising news—including a $300 million round for Kalshi and a reported $2 billion valuation for Polymarket following investment from New York Stock Exchange (NYSE) owner Intercontinental Exchange (ICE), which even culminated in a Polymarket banner on the NYSE.
