Prediction markets explode in 2025: Inside the Kalshi-Polymarket duopoly and challengers

In 2025, prediction markets emerged as a mainstream financial force, with traders pouring billions of dollars into bets on everything from NFL games to Federal Reserve rate decisions.

While the 2024 U.S. election marked their breakout moment, prediction markets have since diversified into various fields, including economics, technology, science, and culture. Sports-related contracts have been driving this year’s massive growth.

The two dominant platforms — Kalshi and Polymarket — have formed a de facto duopoly that generated more than $44 billion in trading volume this year, with monthly volumes topping $10 billion in November. 

Kalshi and Polymarket further broadened their reach through partnerships with some of the biggest names in finance, sports, and media.

According to The Block’s data, Kalshi and Polymarket reported a combined trade volume of over $6 billion so far in December. Their cumulative volume has risen to $28 billion as of Dec. 23, data shows.

Kalshi’s legal victory over the Commodity Futures Trading Commission in May 2025 and the resulting regulatory recognition in the U.S. further fueled this expansion.

During an appearance on 60 Minutes, Polymarket CEO Shayne Coplan said that prediction markets have become “the most accurate thing we have as mankind” when it comes to predicting future event outcomes. 

Crypto industry experts expect prediction markets to outpace the current hype in 2026.

“I absolutely expect traction to accelerate as prediction markets solidify their status as the ‘Dual Pillars’ of finance and media,” said Jimmy Xue, co-founder and COO of Axis. “The $2 billion investment from the Intercontinental Exchange into Polymarket and Kalshi’s exclusive data deals with CNN and CNBC have transformed these platforms from niche speculative tools into essential infrastructure for real-time analysis.” 

Xue added that he expects prediction market data to increasingly replace traditional polling as the primary “truth signal” used by economists, strategists and analysts to forecast global events.

“The growth we saw in 2025 signals real product-market fit,” RedStone Co-founder Marcin Kazmierczak said. “2026 will likely see continued expansion, especially in the U.S., where Kalshi’s regulated model opens doors for broader retail adoption through traditional brokers.”

Challengers

While some companies joined hands with Kalshi and Polymarket to explore prediction markets, others raced to launch their own products to challenge the duopoly.

Earlier this month, Crypto.com launched a prediction market platform in partnership with global sports apparel firm Fanatics. It is already offering event contracts for sports, finance, economics, and politics, and is rolling out its second phase early next year, which includes contracts related to crypto, stocks, climate, AI, and pop culture. 

Gemini, another major crypto exchange, received approval from the CFTC in early December to operate a Designated Contract Market, paving the way for the launch of its event contracts platform Gemini Titan.

Nasdaq-traded fantasy sports and sportsbook platform DraftKings also entered the field, unveiling a standalone prediction markets app available across the U.S., even in states where online sports betting is not allowed. Its CEO Jason Robins previously said that prediction markets could expand DraftKings’ total addressable market without replacing its core sportsbook business.

“The duopoly is already under pressure,” said RedStone’s Kasmierczak. “Emerging players are embedding prediction markets as features, not core products. This bundling within super-apps could siphon off massive casual retail flow, especially if there’s no legislative friction.”

Axis co-founder Xue shared similar views, saying that new entries have effectively ended the duopoly by shifting the competitive focus from “regulatory capture” to “distribution power.”

‘Real differentiator’

Meanwhile, another expert struck a more cautious tone on new prediction market launches, saying that simply duplicating the models of Kalshi and Polymarket won’t guarantee a sizable slice of the emerging market.

“Competition in and of itself isn’t the key factor — It’s actually trust and transparency that is more critical,” said Daniel Marin, CEO and founder of Nexus Labs. “The market has already shown remarkable scale, and if new entrants simply replicate opaque systems with better interfaces, they won’t materially advance the space.”

Marin added that the “real differentiator” will be whether platforms can earn credibility by allowing users to verify that outcomes and settlements are executed exactly as advertised. Polymarket has previously faced criticism over the handling of manipulation issues across a number of bets.

Kalshi, Polymarket and several other contenders also face broader risks over lingering regulatory uncertainties. While event contracts have received approval from the CFTC, Kalshi was hit with enforcement actions from multiple U.S. states that view sports prediction markets as a form of illegal gambling.

“If the hyper-gambling narrative gains political attention, we could see regulatory backlash aimed at protecting users,” Kazmierczak said. “The question isn’t whether they scale, but whether the gatekeepers will let them.”

Still, experts agreed that prediction markets are well on the way to becoming a foundational layer of today’s attention economy.

“They will fundamentally change how society processes information, turning passive news consumption into an active, incentivized pursuit of truth,” Xue said.

© 2025 The Block. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.