The US prediction market sector is moving rapidly toward mainstream adoption, with new analysis projecting that annual trading activity could eventually exceed $1tn. Research from Eilers and Krejcik Gaming (EKG) describes a market that has expanded beyond its early niche status and now sits at the intersection of finance, media, technology, and popular culture.

Unlike regulated online sportsbooks, which must operate under a patchwork of state-level rules and taxes, prediction markets launch with nationwide availability. This structure allows platforms to scale quickly through online distribution and integrate into digital environments where people already share opinions, exchange money, and consume news. EKG argues that this nationwide reach gives prediction markets a foundational advantage as they compete with established gambling and financial products.

A market that cuts across industries

EKG’s analysis suggests that prediction markets do not fit cleanly into a single category. Rather than operating solely as a form of gambling or financial trading, these platforms span multiple sectors at once. The report notes that prediction markets may require a rethinking of how they are classified because they touch gambling, finance, and media simultaneously.

The analysts also emphasize that prediction markets cover a wide range of topics and should not be treated as a uniform product. As the report explains: “It’s well within the realm of the plausible that some kinds of markets may be more controversial, subject to greater scrutiny, or more likely to be limited or banned than others. Sports markets come immediately to mind, but are not the only category of markets that may end up as an outlier in some way, shape, or form.”

While sports currently account for the largest share of activity, EKG highlights many other contract types, including financial indicators, political outcomes, news-related events, crypto benchmarks, and cultural questions. Because contracts can be written around almost any outcome that can be objectively verified, the potential range of markets extends far beyond traditional betting formats.

Trillion-dollar volume projections

EKG estimates that a mature US prediction market ecosystem could generate more than $1tn in annual trading volume. Even though sports dominate current usage, the firm expects that category to represent 44% of total volume over the long term, as non-sports markets grow at a faster pace.

A separate assessment from Citizens Financial Group projects that the sector could surpass $10bn in annual revenue by 2030, roughly five times its current size. At present, platforms such as Kalshi, Robinhood, Crypto.com, Polymarket, and Fanatics collectively generate about $10bn in trading activity, according to Citizens’ analysis.

Comparing prediction market volume with sportsbook handle requires adjustment. In prediction markets, both sides of a trade count toward volume. For example, a 40-cent contract matched with a 60-cent position produces a dollar in trading volume. E&K developed a method to translate that figure into sportsbook-style handle and concluded that mature sports prediction markets could support handle equal to about 60% to 80% of today’s licensed online sports betting market. Prediction markets already operate in all 50 states, while online sports betting remains legal in 31.

Business models and expanding distribution

Prediction market operators rely on revenue streams that differ from traditional sportsbooks. Instead of focusing primarily on house edge, platforms generate income through transaction fees, subscriptions, data products, advertising, and cross-selling into other financial services. EKG estimates steady-state EBITDA margins between 25% and 45% for pure-play operators, supported by lower operating costs and the absence of state gaming taxes.

Large fintech firms and politically influential figures have played a central role in accelerating awareness. EKG points to ties involving President Donald Trump and members of his family, along with companies such as Coinbase, Kalshi, and Gemini, as contributors to recent momentum. This contrasts with the sportsbook model, where regulatory approval historically provided legitimacy.

Distribution remains a key variable. EKG outlines the possibility of integrating prediction markets directly into major social media platforms, where opinions already circulate at scale. Earlier attempts by social networks to enter sports betting faced regulatory obstacles, while prediction markets may encounter fewer barriers.

Sports stakeholders represent another uncertainty. League or team support could boost casual participation, though alignment among leagues, teams, and player unions remains uncertain as more operators enter the space.

Regulation and convergence with investing

Regulatory outcomes remain unsettled, with litigation or federal legislation capable of altering growth trajectories. EKG suggests that a future Democratic administration may face limits if it attempts to reverse recent developments. The analysts write: “Rolling back prediction markets is unlikely to be a headline issue for the Democratic base (with some exceptions) and Democrats will have to carefully consider the pushback from the crypto lobby (one of the painful lessons learned in the 2024 cycle) before taking any aggressive action. There’s also the possibility that the courts may have spoken on the issue at that point in a way that makes returning said genie to said bottle an exceedingly cumbersome task.”

Market participants increasingly describe a blending of investing and gambling. Chris Grove, partner emeritus and strategic advisor at Eilers & Krejcik, said: “Numerous factors, most notably legal and regulatory challenges, could delay or derail the growth of prediction markets. But the fundamental elements of consumer demand and an array of diverse brands looking to meet that demand are clearly in place.” He later added, “There’s always been some overlap between the two, but we appear to be living in a world where gambling is [becoming] more like investing just as investing is pushing further and further in the direction of gambling.”

Robinhood CEO Vlad Tenev echoed that sentiment, saying: “We think we’re in the early stages of a prediction market supercycle.”