Prediction Markets Gain Ground as Finance Firms Build Around Event Contracts

Regulated event contracts are gaining traction as exchanges, brokers and data providers expand prediction markets into a financial category spanning politics, economics, sports and culture.

The U.S. market is developing along two different regulatory tracks. One centers on federally supervised exchanges, while the other includes crypto-native platforms that have operated outside the domestic derivatives framework.

The Commodity Futures Trading Commission designated KalshiEX LLC as a designated contract market on Nov. 4, 2020. That status allows Kalshi to operate under the Commodity Exchange Act and CFTC rules governing designated contract markets.

Kalshi’s approval later became important in a dispute over contracts concerning control of Congress. A federal district court ruled for Kalshi in September 2024, determining that the contracts did not fall within the statutory ban on gaming or unlawful activity.

The D.C. Circuit declined to pause that ruling while the appeal proceeded. The decision left the wider legal dispute unresolved.

Polymarket took a different route. The CFTC ordered Blockratize Inc., which operates Polymarket, to pay a $1.4 million civil penalty on Jan. 3, 2022, over unregistered event-based binary-option markets and required the platform to wind down markets that violated CFTC rules.

Those cases show why prediction markets remain divided in the United States. Kalshi operates as a federally designated exchange, while Polymarket developed as a blockchain-based platform serving users around the world.

Institutional involvement has added momentum. Intercontinental Exchange announced on Oct. 7, 2025, that it planned to invest up to $2 billion in Polymarket and distribute the platform’s event-driven data globally.

“Our partnership with ICE marks a major step in bringing prediction markets into the financial mainstream,” Polymarket founder and CEO Shayne Coplan said.

Brokerage activity is also expanding. Robinhood recorded $156 million in event-contract revenue during the second quarter of 2026, more than 10 times the year-earlier amount.

In these markets, participants buy and sell positions tied to whether a defined event will happen. Prices are often read as implied probabilities, but liquidity, fees, incentives and trading structure can influence them.

Contracts can address political, economic, sporting and cultural outcomes. Their possible uses extend beyond trading, including business risk management and the distribution of market-based expectations to media and data users.

An event contract is a derivative whose payout depends on a specified event, occurrence or value. That makes it distinct from products usually linked to assets such as stocks, commodities or interest rates.

The broader infrastructure case still depends on market quality. These products need liquidity, dependable settlement and participants with different information and incentives, while high activity around elections or sports does not prove that every type of uncertainty can be priced at scale.

The available evidence points to an expanding financial-product category, not a completed global information infrastructure. Its next phase will depend on whether event-market prices become useful to companies, financial institutions and media organizations as well as traders.