Prediction Markets Poised to Hit $1 Trillion as Kalshi and Polymarket Vie for Dominance

Kalshi has solidified its dominance in the prediction market sector, capturing 62% of total trading volume from September 11–17, 2025, according to Dune Analytics data. During this period, the CFTC-authorized platform processed over $500 million in weekly trading volume, outpacing Polymarket’s $430 million. Kalshi’s average open interest of $189 million also exceeded Polymarket’s $164 million, reflecting divergent user behaviors. The disparity in open interest-to-volume ratios—0.29 for Kalshi versus 0.38 for Polymarket—highlights Kalshi’s faster turnover and Polymarket’s preference for longer-term positions, which often span weeks or monthstitle8^[5].

Polymarket, however, is not ceding ground easily. The platform has introduced markets offering a 4% yield to attract bettors, particularly in high-interest areas such as Federal Reserve policy decisions and U.S. election outcomes. For instance, a market speculating on a 50+ basis point Fed rate cut by October carries a 4% yield, while another on U.S. election outcomes similarly highlights the platform’s appealtitle1^[1]. These offerings aim to lure investors seeking both predictive insights and competitive returns, a strategy Polymarket has amplified through partnerships like its collaboration with social investing platform Stocktwits. This partnership enables earnings-based prediction markets, allowing stockholders to hedge risks and analysts to gauge real-time sentimenttitle8^[5].

Kalshi’s surge is partly attributed to its aggressive expansion into sports betting, a sector now accounting for over 70% of its trading volume. The platform’s regulated U.S. presence, combined with partnerships such as its integration with Robinhood and Solana, has fueled growth. Sports betting markets for the NFL and college football, along with prop bets on in-game events, have driven user engagement. Analysts note that Kalshi’s ability to offer legal, accessible betting in all 50 states—via the App Store—gives it a critical edge over Polymarket, which relies on international users and crypto-based access.

Polymarket’s recent acquisition of QCX, a CFTC-regulated derivatives exchange, is a strategic move to re-enter the U.S. market and compete with Kalshi’s regulatory advantage. The $112 million acquisition, finalized in July 2025, is expected to streamline Polymarket’s compliance and expand its offerings to domestic investorstitle8^[5]. Additionally, the platform’s focus on longer-term markets—such as those tracking political events or crypto price movements—caters to a distinct audience, even as it faces pressure from Kalshi’s high-frequency trading modeltitle8^[5].

The competition between the two platforms underscores broader trends in prediction markets. Analysts like Jack Such of Kalshi argue that event contracts provide a “maximally direct way to get exposure to events affecting businesses, people, and economies,” with Such predicting the sector could become a $1 trillion asset classtitle8^[5]. Meanwhile, Polymarket’s emphasis on longer-term positions and its recent valuation estimates of $9–$10 billion signal confidence in its ability to carve out a niche despite Kalshi’s dominance.

As both platforms vie for market leadership, their strategies reflect divergent visions of the prediction market’s future. Kalshi’s regulatory compliance and sports betting focus align with mainstream financial markets, while Polymarket’s blockchain-based, global approach targets a broader, crypto-native audience. The outcome of this rivalry will likely shape how prediction markets evolve as tools for financial hedging, political forecasting, and beyondtitle8^[5].