Prediction Markets Hit $2B Record as Polymarket Retakes Lead

The prediction market industry has reached a historic milestone, with weekly trading volume exceeding $2 billion for the first time according to Dune Analytics data. This record-breaking performance comes as Polymarket retakes the volume lead from competitor Kalshi after eight consecutive weeks of trailing. Polymarket now commands $1 billion in weekly volume, closely followed by Kalshi’s $950 million, marking a significant shift in market dynamics from last November when Polymarket accounted for $1.2 billion and Kalshi for $749 million.

The resurgence of Polymarket coincides with its strategic move to reenter the U.S. market, having begun beta testing its U.S. app just over a week ago. This timing positions the platform advantageously ahead of the upcoming November elections, where political markets are expected to drive substantial activity. Meanwhile, Kalshi had previously gained momentum in August, not coincidentally at the start of the new NFL season, leveraging its status as the first federally regulated prediction market platform in the United States to overtake Polymarket for the first time.

Despite growing election-related activity heading into November, sports betting continues to dominate prediction market volume. Last week, sports markets drove $414.7 million worth of volume compared to $322.6 million in political markets across the sector. This represents a significant reversal from last November’s market composition, when President Donald Trump’s reelection drove political markets to nearly surpass the $2 billion weekly volume threshold.

The sustained dominance of sports markets highlights the fundamental appeal of prediction markets beyond political speculation. The NFL season’s start in August provided a clear catalyst for Kalshi’s initial surge past Polymarket, demonstrating how major sporting events can drive substantial user engagement and trading activity. However, political markets are quickly picking up momentum in recent weeks, suggesting that election-related trading could soon challenge sports betting’s leadership position as November approaches.

The prediction market sector has attracted massive institutional investment, with both leading platforms securing funding rounds that have propelled them to multi-billion dollar valuations. Kalshi earlier this month closed a $300 million series D round led by venture capital giants a16z and Sequoia, valuing the company at $5 billion. Notably, this round included crypto exchange Coinbase as an investor, marking the first time Coinbase has invested in a U.S.-based prediction market company.

Meanwhile, Polymarket recently secured a $2 billion investment from New York Stock Exchange parent company Intercontinental Exchange (ICE), pushing the company to a $9 billion valuation. These substantial investments reflect growing confidence in the prediction market model and its potential for mainstream adoption. The industry’s growth prospects are further validated by a Certuity report estimating that prediction markets could reach $95.5 billion by 2035, with a compound annual growth rate of 46.8%.

The prediction market industry has benefited from a relaxed regulatory environment at the federal level, with both Polymarket and Kalshi receiving CFTC no-action letters earlier this year. Kalshi received its letter in May, followed by Polymarket in September, giving both companies the green light to open their platforms to U.S. users without the looming threat of enforcement action from the federal regulator.

However, this regulatory clarity at the federal level contrasts with growing challenges from state regulators, who have questioned the platforms’ status as CFTC-regulated entities. Despite these state-level uncertainties, the federal no-action letters have provided crucial regulatory cover for the platforms’ expansion and user acquisition efforts. The regulatory developments come as user activity swells across both platforms, with smaller competitors like Limitless quadrupling its footprint to $21.9 million weekly volume and Myriad, a product of Decrypt’s parent company Dastan, growing to $3.8 million worth of weekly volume.

Speculation about Polymarket’s potential token launch has triggered sophisticated airdrop farming strategies among users seeking future allocations. Despite predictors giving only a 15% chance that Polymarket announces its token this year, and Decrypt reporting that a launch likely won’t occur before January, users are actively positioning themselves for potential rewards.

Prediction market insiders tell Decrypt that airdrop farmers have become more sophisticated in their attempts to circumvent any anti-farming conditions for token allocation. This behavior mirrors last year’s patterns, when users anticipating a token launch following the U.S. election bought and sold large positions to artificially inflate their volume, aiming to position themselves for larger allocations of a future token airdrop. These airdrops are typically designed to reward a crypto protocol’s most active and fervent users, creating strong incentives for strategic trading behavior even in the absence of confirmed token launch plans.