Prediction markets—platforms where users bet on real-world outcomes like elections, sports, or economic events—have exploded in popularity since the 2024 U.S. presidential race.

What started as niche tools for gauging sentiment are now seen as scalable infrastructure for event-based trading, blending elements of betting, forecasting, and financial derivatives.

At the center of this boom are two dominant players: Kalshi, a CFTC-regulated U.S.-based exchange, and Polymarket, a blockchain-native platform that’s pushing for broader U.S. access.

Recent funding rounds have propelled their combined private valuations above $25 billion, signaling investor confidence in a concentrated “duopoly” where these two platforms capture the lion’s share of liquidity and activity, rather than a fragmented field of dozens of startups.

Kalshi’s Valuation Trajectory From $5B to $11B in Weeks

Kalshi’s growth has been meteoric. Just last week, the company closed a $1 billion funding round led by Sequoia Capital and Alphabet’s CapitalG, valuing it at $11 billion—more than double its $5 billion mark from an October 2025 Series D round that raised over $300 million from backers including Andreessen Horowitz and Paradigm.

This brings Kalshi’s total funding to roughly $1.6 billion. Post-election volume surge; expanded to sports betting. Hit $50B annualized volume; global expansion to 140+ countries. Record $1.3B quarterly inflows; 60% market share in volumes.

This “doubling in weeks” reflects over $1.3 billion in fresh capital committed to Kalshi this quarter alone, driven by its pivot from politics to high-volume categories like sports like NFL outcomes and crypto events.

Open interest (OI) now stands at $320 million, nearing 2024 election peaks, with November on track for record volumes exceeding $7 billion industry-wide.

Kalshi vs. Polymarket

Investors aren’t spreading bets across the sector—they’re doubling down on Kalshi and Polymarket as the “default venues” for event risk trading.

Polymarket, which runs on Polygon’s blockchain with USDC settlements, is reportedly negotiating a new round at $12-15 billion, up from $9 billion in an October 2025 deal backed by up to $2 billion from Intercontinental Exchange (ICE, owner of the NYSE).

This would push the duo’s combined valuation past $25 billion, a concentration unseen in recent crypto/fintech cycles like NFTs or AI startups. CFTC greenlight for U.S. via licensed venue; $259M weekly volume.

POLY token airdrop hype; 40% market share. Deep liquidity on just two platforms will dominate, much like DraftKings and FanDuel in sports betting. Kalshi holds ~60% volume share, while Polymarket’s on-chain data shows ~40%, with OI at $300 million.

Together, they’ve captured over $7 billion in volume since September, outpacing rivals. Kalshi’s CFTC license provides a “moat” for U.S. users, enabling fiat-based trading without crypto volatility. Polymarket’s U.S. re-entry via a derivatives venue adds legitimacy, with ICE integration potentially feeding data into Wall Street terminals.

Post-2024 election, volumes have 3x’d. Kalshi hit top of Apple’s Finance app charts with 1.3 million users; Polymarket’s decentralized model allows instant market creation hundreds live vs. Kalshi’s 10+. Sports now rivals politics as the top category.

Polymarket’s upcoming POLY token and airdrop inject crypto upside. Kalshi’s Robinhood partnership targets retail, while both use central limit order books (CLOBs) for better liquidity.

These aren’t just bets—they’re sentiment oracles for hedging (e.g., election impacts on stocks). Bank of America calls them “untaxed gambling,” but volumes suggest institutional interest.

Fiat/KYC focus; strong in U.S. sports/politics; resolution via third-party sources for nuance. Slower market launches, higher fees critics note wide spreads.

Polymarket: On-chain, global access; UMA Oracle for resolutions censorship-resistant but controversial. Zero fees, fast creation. U.S. restrictions until recently.

Both emphasize professional market makers, CLOBs, and similar categories. The battle shifts to distribution—Kalshi via apps like Robinhood, Polymarket via X partnerships and crypto wallets.

Critics argue prediction markets erode retail capital with poor odds, and resolutions remain contentious. Regulatory scrutiny could intensify, especially on “gambling” labels. Yet, with clearer paths and $25B+ in backing, the duopoly looks locked in.

If volumes hit $10B+ monthly, expect IPOs or tokens by 2026, reshaping how we price uncertainty. As one investor noted, they’ve “created a new market out of thin air.”