Key Moments:
- Kalshi achieved $1.3 billion in trading volume in September 2025, claiming 62% of global market share
- Polymarket reached 450,000 monthly active traders in January 2025, up 91% from October 2024
- The U.S. is witnessing 74 percent of gambling activity deemed illegal, with 26 percent legal
Rising Influence of Prediction Market Platforms
Prediction markets are carving out a prominent space in the U.S. financial landscape. Platforms including Kalshi and Polymarket have quickly transitioned from niche operations to significant drivers of event-focused investment activity. This momentum is underscored by robust trading numbers, as Kalshi registered a record $1.3 billion in trading volume for September 2025, taking approximately 62 percent of the global sector’s market share. During the period from 11–17 September 2025, the platform processed over $500 million in trades and averaged $189 million in open interest, outpacing Polymarket’s $430 million weekly trade volume and $164 million open interest.
User Growth and Regulatory Developments
User participation is expanding at a rapid pace. Despite facing a ban from 2022 until recently, Polymarket continued to build a following, inviting users to wager on political, sports, and financial events. In January 2025, Polymarket counted 450,000 monthly active traders, jumping 91 percent from the 235,000 reported in October 2024, before experiencing a later drop in user numbers. Analysts highlight this trend as evidence of growing mainstream interest in event-driven wagering.
Analysts connect the rise of these platforms to the intersection of social media engagement and financial speculation. A KPMG research note stated that prediction markets are “turning public debate into real-time price discovery.” The U.S. regulatory climate is evolving, with Kalshi holding Commodity Futures Trading Commission (CFTC) approval and Polymarket re-entering the American market through acquisition of a licensed derivatives exchange. As institutional interest picks up, the potential for prediction markets to take a formalized role in finance is increasing, generating unease among established gambling operators.
Industry Pushback and Legal Complications
During the Global Gaming Expo (G2E) in Las Vegas, the impact of these platforms took center stage. Concerns revolved around how companies such as Kalshi are affecting state and tribal-regulated betting markets. The American Gaming Association (AGA) CEO Bill Miller issued a strong caution: “The AGA and our members are mobilising across every battlefield. They’re threatening the communities we serve, the customers and consumers we protect, and the standards we uphold.” Miller continued, “Why all this deception? It’s simple. They want the opportunity, but they don’t want any of the regulatory compliance. And they really don’t care about their concern for the public good, but these illegal actors aren’t fooling anyone.” He added, “They call it innovation. I call it something else. It’s greedy, it’s reckless, and it’s irresponsible.”
State Responses and Legal Challenges
Multiple states have flagged concerns about prediction markets infringing on traditional sports betting. Federally regulated but accessible nationwide, these platforms are available even in states like California and Texas, where sports betting is not legal. Recently, Ohio threatened sportsbook operators with license revocation if they participate in prediction markets tied to sporting events. A wave of lawsuits underscores mounting unease, as legal and financial circles seek to clarify whether these markets should be regulated as financial products or treated as betting exchanges.
Many of these lawsuits are ongoing, with no immediate resolution expected. Industry experts point to a deeper challenge – according to them, 74 percent of the U.S. gambling market is illegal versus 26 percent legal, a split that has not changed this year.
Expert Perspectives: Market Dynamics and Social Trends
Ismail Vali, CEO and Founder of Yield Sec, commented that illegal betting persists due to accessibility and strong customer incentives. “Illegal gambling is everywhere. It’s every product — it’s sports, casino, poker, everything. They offer great promotions, they don’t pay tax, they don’t do licencing, they don’t check who you are, and that makes them easy and convenient for customers to use. Players may not get paid if they win, but nobody is thinking about that at the time of placing a bet,” Vali explained.
Vali observed that prediction platforms, often known as “predictors”, represent a new face of betting: “It’s the same product in a different wrapper. You can call it predicting or forecasting, but at the end of the day, it’s betting on a future outcome.” He questioned the effectiveness of current U.S. gambling law, saying, “The American law is insane. Just because a state like California says there’s no online gambling doesn’t mean anything if everyone can still gamble illegally from their phones. The law is completely out of touch with reality.”
Tracing the development of these platforms, Vali stated, “Prediction markets started on Binance and FTX around nine or ten years ago. It began with bets on Bitcoin and stock movements. But because it’s user-generated, it evolved fast. Soon, people were betting on sports, celebrities, and politics.” He also commented, “You could sell someone Bitcoin once every few months, but you can sell them a predictor every 15 minutes,” and warned about the appeal to younger audiences: “Under-30s don’t think they’re gambling. They genuinely believe they’re predicting. Whatever that means, but it’s not gambling when it absolutely is.”
Platforms such as Kalshi, Polymarket, and Robinhood have moved swiftly into this regulatory gray zone. “They’re what I call the ‘innovators’. They saw the opportunity and moved in because the law hasn’t caught up. They’re winning court cases and expanding while regulators are still arguing about definitions,” Vali said. He warned, “The American online gambling market is being squeezed on both sides. On one side, crime and illegal operators. On the other hand, innovators who call themselves legal but drain all the oxygen from the licenced market. Legal operators are suffocating in between.”
Vali warned, “The US is already losing 74 percent of its gambling market to illegal activity. If you now add semi-legal innovators who don’t pay the same taxes or follow responsible gaming rules, you’re not fixing the problem, you’re multiplying it.”
Expansion, Visibility, and Cultural Impact
According to Vali, the threat posed by prediction platforms is escalating: “Now you’re introducing another ingredient to it, which is also going to take oxygen away from the legals.” He emphasized that unless there is swift regulatory action, these platforms are positioned to continue making substantial profits. “Kalshi, Polymarket, and the rest of them are going to make money. I’m telling you today, no, you won’t unless you monitor, police, enforce, and optimise all of your marketplaces in America. And that is not being done today. So how the hell is it going to be done tomorrow?” he asked.
Vali highlighted the platforms’ growing prominence, noting celebrity affiliations and their increasing presence in pop culture: “It’s everywhere. It’s the most noticeable in America because of the political and media debate, and because of Donald Trump’s son being involved with Kalshi. That’s what has led to them being famous. The last South Park episode had Kalshi and Polymarket in it. I’ve never seen DraftKings or FanDuel in any South Park episode. That’s how much they’re part of the social conversation.” He pointed to the risk of normalizing such platforms, stating that their global reach could quickly extend beyond the U.S.
Trading Activity Snapshot
Platform | September 2025 Monthly Volume | Global Market Share (%) | Weekly Volume (11-17 Sep 2025) | Open Interest (Week of 11-17 Sep 2025) | Monthly Active Traders (January 2025) |
---|---|---|---|---|---|
Kalshi | $1.3 billion | 62 | $500 million+ | $189 million | – |
Polymarket | – | – | $430 million | $164 million | 450,000 |
Looking Ahead
The rapid growth of prediction markets is challenging established norms in the U.S. gambling landscape, with experts cautioning that regulatory inertia could allow these platforms to eclipse traditional betting operators. As social and financial lines continue to blur, the industry faces mounting pressure for effective oversight and enforcement to preserve the regulated market’s position.
- Author
Daniel Williams
