Gemini Bets on Prediction Markets to Fuel Post-IPO Growth Amid Regulatory Hurdles

Gemini, the cryptocurrency exchange founded by the Winklevoss twins, is preparing to launch prediction market contracts as it seeks to diversify beyond crypto trading, according to a CryptoNews report. The firm filed an application with the CFTC in May to establish a derivatives platform, aiming to create a regulated space for trading event-based contracts on economic, political, and sports outcomes. If approved, Gemini would join existing players like Kalshi and Polymarket, both of which have seen surging demand, particularly ahead of the 2024 U.S. election cycle, according to a Coinpedia story. However, the same report warned that regulatory delays—exacerbated by a recent government shutdown—could push back the launch timeline by months or even years.

The move reflects Gemini's broader strategy to expand into financial forecasting products following its September 2025 initial public offering (IPO), which raised $425 million. The exchange, which currently operates at a loss and holds a small share of U.S. crypto trading volume, Bloomberg reported. Gemini aims to attract new retail and institutional users through prediction markets. These platforms allow participants to bet on real-world events, such as election outcomes or economic indicators, by trading derivatives tied to their resolution. Analysts from investment bank Needham have described prediction markets as an "attractive opportunity" for Gemini to grow post-IPO.

Gemini's entry into this space comes amid a surge in competition. Kalshi, already regulated by the CFTC, and Polymarket, which is preparing to re-enter the U.S. market, have reported record trading volumes in recent months. Meanwhile, rivals like Robinhood have opted to partner with existing platforms rather than navigate the complex regulatory landscape independently. Coinbase, Gemini's top U.S. crypto competitor, has also signaled plans to introduce event contracts as part of its "Everything Exchange" strategy.

Despite the growing interest, regulatory uncertainty remains a significant hurdle. While the CFTC has permitted Kalshi to operate, state gaming regulators have challenged the legality of prediction markets in court, arguing they overlap with traditional sports gambling oversight. Gemini's reputation for compliance, bolstered by its New York BitLicense, may help it gain early trust in this ambiguous environment.

The potential launch of prediction markets aligns with Gemini's broader vision to position itself as a "compliance-first" player in the evolving financial technology sector. The firm's IPO prospectus highlighted its intention to explore "economic, financial, political, and sports forecasts" as part of its diversification strategy. However, the exchange's stock has traded roughly 40% below its debut price, underscoring the challenges of competing in a crowded and rapidly shifting market.

As the CFTC reviews Gemini's application, the company faces the dual challenge of securing regulatory approval while differentiating itself in a market already saturated with options. The outcome could determine whether Gemini successfully capitalizes on the prediction market boom or struggles to gain traction against established rivals.