Prediction markets could hit a trillion dollars in trading volume by the end of this decade, new report says

Core Insights - Prediction markets could reach a trillion dollars in annual trading volume by the end of the decade according to Eilers & Krejcik [1] - Legal and regulatory challenges may delay the growth of prediction markets, but consumer demand and diverse brands are driving the market [2] Market Dynamics - The prediction market space allows users to wager on various events, including culture, politics, and sports, with platforms like Polymarket and Kalshi gaining popularity [3] - Sports are expected to represent 44% of the long-run volume for prediction markets, indicating a significant growth area [2] Trading Volume Comparison - In prediction markets, both sides of a trade are counted as volume, complicating comparisons with traditional sportsbooks [3] - Eilers & Krejcik developed a formula to translate prediction volume into sportsbook handle, estimating that mature sports prediction markets could support a handle of 60% to 80% of the current online sports betting market [4] Regulatory Landscape - Online sports betting is legal in only 31 states, while prediction markets have launched in all 50 states, providing a broader market opportunity [5] - The introduction of prediction market features by companies like Robinhood indicates a shift in the industry, with traditional sportsbooks recognizing potential disruption [5]