Prediction Markets Surge Toward $10B Revenue as Institutional Adoption Accelerates

Prediction markets are experiencing rapid growth as traders increasingly seek precise tools to price and hedge discrete events such as elections, interest rate decisions, inflation data, and regulatory rulings. Instead of relying on indirect proxy trades like index futures or options, investors are turning to event-based contracts that reduce basis risk and offer targeted exposure to specific outcomes.

According to a recent report from U.S. bank Citizens, prediction markets are now operating at an annualized revenue rate exceeding $3 billion, up from roughly $2 billion in December. The bank projects the industry could reach $10 billion in annual revenue by 2030, describing that figure as a medium-term milestone rather than a peak. Analysts led by Devin Ryan highlighted accelerating trading volumes, improving market infrastructure, and early institutional engagement as key growth drivers.

Trading activity has remained strong, with January volumes rising more than 40% compared to December. February is maintaining a similar pace, even after the expected seasonal slowdown following major sporting events. While sports prediction markets continue to provide significant liquidity, activity is expanding into macroeconomic indicators, political developments, and regulatory decisions—areas that align more closely with institutional demand.

Major platforms such as Kalshi, a CFTC-regulated U.S. event contracts exchange, and Polymarket, a leading decentralized prediction market, are attracting increasing attention from mainstream finance and regulators. This evolution mirrors the early stages of listed derivatives and digital assets, where retail participation gradually gave way to professional market makers and institutional capital.

Currently, revenue is primarily transaction-driven. However, analysts anticipate additional growth from data services, research products, financing solutions, and enhanced settlement infrastructure. As regulatory clarity improves and market depth increases, direct institutional trading in prediction markets is expected to scale significantly, positioning the sector as a core component of modern financial risk management.