Prediction markets are now running at an annualized revenue rate above $3 billion, up from roughly $2 billion in December, and could reach $10 billion by 2030, according to a Monday report from U.S. bank Citizens. Analysts led by Devin Ryan said the trajectory mirrors the early evolution of listed derivatives and digital assets.
Volume Surge Broadens Beyond Sports
January volumes rose more than 40% from December, with February tracking at a similar pace despite an expected post-Super Bowl slowdown. While sports remain a key liquidity driver, activity is expanding into macroeconomic, political and regulatory events — areas more aligned with institutional demand.
Key Platforms: Kalshi and Polymarket Lead
Prediction markets have moved beyond niche betting into a sophisticated ecosystem. Kalshi, a CFTC-regulated U.S. exchange for event contracts, and Polymarket, a decentralized market covering politics, sports and economics, are drawing significant volume and attention from mainstream finance and regulators alike.
Institutional Path: Data Integration First
Asset classes typically scale from retail liquidity to professional market makers and eventually institutional capital. Citizens argues prediction markets follow this path. Institutional participation is emerging through data integration, liquidity provision, settlement standards and regulatory clarity, with direct trading expected to scale as infrastructure matures. Revenues are currently transaction-driven, but the bank sees growth in data, research and financing services ahead.
Prediction markets let investors hedge discrete event risk — from inflation surprises to M&A approvals — without proxy instruments like index futures or options, reducing basis risk. By isolating specific outcomes, they provide targeted risk transfer and real-time, capital-weighted probability signals.