Prediction markets are on track for a dramatic expansion, with Prediction markets may reach $1 trillion in trading volume by the end of the decade, according to a new report from Eilers & Krejcik, a research firm focused on sports betting and interactive gaming.
The report highlights massive potential—but also clear obstacles. Legal and regulatory uncertainty remains the biggest wildcard that could slow momentum. Still, industry fundamentals look strong.
“Numerous factors, most notably legal and regulatory challenges, could delay or derail the growth of prediction markets,” said Chris Grove, partner emeritus and strategic advisor at Eilers & Krejcik, in comments to CNBC. “But the core ingredients—consumer demand and a wide range of brands eager to serve that demand—are already firmly in place.”
Sports Betting Drives the Next Wave
Sports are expected to be the engine behind this growth. Eilers & Krejcik projects that sports-related predictions will account for about 44% of total long-term trading volume in prediction markets.
Prediction platforms allow users to trade on outcomes across sports, politics, culture, and current events. Their rising popularity—driven by platforms such as Polymarket and Kalshi—has prompted traditional sportsbooks to explore prediction-style products of their own.
However, comparing prediction market volume with traditional sportsbook betting isn’t straightforward. In prediction markets, both sides of a trade count toward total volume, unlike sports betting handle, where only the amount wagered is counted.
For example, if one trader buys a contract for 40 cents and another takes the opposing 60-cent position, the system records $1 in trading volume. In sports betting, a $1 bet is simply $1 in handle.
Using a custom conversion formula, Eilers & Krejcik estimates that mature sports prediction markets could generate sportsbook-style handle equal to roughly 60% to 80% of today’s regulated online sports betting market.
A Nationwide Advantage
One key advantage prediction markets hold is geographic reach. While online sports betting is legal in just 31 U.S. states, prediction markets are already operating nationwide.
That broader access is attracting major players. This week, Robinhood rolled out new prediction features tied to NFL parlays and player prop bets.
“The sportsbooks definitely see the writing on the wall and how this could completely disrupt their business,” Robinhood CEO Vlad Tenev told CNBC.
Fanatics, teaming up with Crypto.com, launched Fanatics Markets in early December. Meanwhile, DraftKings and FanDuel are widely expected to debut their own prediction platforms soon.
Still Early—but Scaling Fast
Despite the hype, analysts say the sector is still in its infancy. Platforms including Kalshi, Robinhood, Crypto.com, Polymarket, and Fanatics currently generate around $10 billion in trading volume, according to a recent analysis from Citizens.
But that figure could grow rapidly. Analysts describe prediction markets as being in “the early innings of exponential scaling,” noting that institutional participation may be the next major catalyst.
Tenev put it more bluntly: “We think we’re in the early stages of a prediction market supercycle.”
Where Investing Meets Gambling
As prediction markets mature, companies will take very different paths to convert users. FanDuel’s approach to steering prediction traders toward online sportsbooks or iCasino products will look nothing like Robinhood’s effort to nudge traders toward stocks and ETFs.
Yet one theme is becoming increasingly clear—the line between investing and gambling is blurring.
“There’s always been some overlap between the two,” Grove said, “but we’re now in a world where gambling is starting to look more like investing, while investing is increasingly taking on characteristics of gambling.”
