Regulation-Driven Liquidity Propels Kalshi Past Polymarket

Kalshi has surpassed Polymarket in U.S. trading volume, capturing 62–62.2% of the on-chain prediction market sector’s activity in late September 2025, according to analytics platforms Dune and The Block. The platform reported weekly trading volumes exceeding $500 million, with an average open interest of $189 million, outpacing Polymarket’s $430 million in volume and $164 million in open interest. This shift reflects a significant reallocation of liquidity, driven by Kalshi’s regulated U.S. framework and its focus on short-term, high-turnover markets.

The disparity in open interest-to-volume ratios further underscores the platforms’ differing user behaviors. Kalshi’s ratio of 0.29 indicates faster trading turnover compared to Polymarket’s 0.38, suggesting that users on Kalshi are more inclined to trade frequently, while Polymarket’s longer-term markets—often spanning weeks or months—lock funds in for extended periods. This dynamic aligns with Kalshi’s strategy to attract retail and institutional participants seeking liquidity and regulatory clarity, particularly in politically and sports-related markets.

Kalshi’s surge coincided with the start of the 2025 NFL season, which spurred a spike in sports betting-related trading. The platform processed $441 million in volume since the league’s kickoff, with CEO Tarek Mansour describing the first week of the season as equivalent to a U.S. election in terms of trading activity. Meanwhile, Polymarket, which re-entered the U.S. market via its acquisition of regulated derivatives exchange QCX, has secured a CFTC no-action letter but remains constrained by legal challenges. Massachusetts authorities have sued Kalshi for operating unlicensed sports betting markets, alleging its platform functions similarly to online gambling sites.

Valuation trends highlight the diverging trajectories of the two platforms. Kalshi recently raised $185 million in a funding round led by Paradigm, valuing the firm at $2 billion, while Polymarket is reportedly seeking a $9–$10 billion valuation amid its U.S. relaunch. Despite regulatory hurdles, Polymarket’s acquisition of QCX and its CFTC approval position it to compete in the American market under federal oversight. However, Kalshi’s institutional partnerships—such as its first dedicated market maker, Susquehanna Government Products, and collaborations with Solana and Base—signal growing mainstream adoption of regulated prediction markets.

The competition mirrors broader trends in the crypto and fintech sectors, where regulatory compliance is increasingly critical for institutional engagement. Kalshi’s U.S.-centric, KYC-compliant model contrasts with Polymarket’s global, pseudonymous approach. Analysts note that while Polymarket’s broader market coverage (including geopolitical events) appeals to a diverse audience, Kalshi’s regulatory edge and liquidity advantages are reshaping the sector’s dynamics. As both platforms prepare for further fundraising and expansion, the prediction market industry appears poised for mainstream integration, driven by convergence with crypto, AI, and real-time financial instruments.