Prediction Markets Surge to Record $702 Million Despite Regulatory Headwinds

Prediction markets have reached a new era as their trading volumes have hit a record $701.7 million in total, despite the US regulatory hurdles. The rally has been a sign of markets gaining popularity as one of the major use cases within the crypto ecosystem.

Market Dominance and Competition

Kalshi was the main mover, representing two-thirds of the overall trading volume at $465.9 million, while the rest of the field Polymarket and Opinion made up $100 million worth of trades. The past record of $666.6 million was broken, thus illustrating the fast expansion of prediction markets.

More than a handful of crypto exchanges such as Coinbase and Gemini are setting up prediction markets, meanwhile, non, custodial wallets like MetaMask are also taking similar steps.

Source: Rejolut

Also Read: Parcel and Polymarket Bring Data-Driven Housing Forecasts to Prediction Markets

Regulatory Challenges and Legal Battles

Prediction markets are under threat from regulators, as law makers in New York are reviewing a bill which would ban certain markets related to politics, sports, and the stock market. Other US states, such as Connecticut, Nevada, and New Jersey, have sought to restrict prediction market operators which has led to legal actions in response. A Tennessee federal judge has temporarily prevented state regulators from disciplining Kalshi which sued the state after it was ordered to stop offering sports event contracts.

Source: Dune Analytics

Also Read: Crypto.com Expands Prediction Markets with Internal Market Maker in 2025

Institutional Interest and Valuation

Wall Street has shown interest in the integrations and growing trading volumes with market leaders Polymarket and Kalshi leading the way with multibillion-dollar valuations. Polymarket’s valuation is estimated to be between $8 and $12 billion while Kalshi’s valuation hit another $11 billion after securing $1 billion in funding. While the industry is facing these challenges, attaining regulatory clarity will be a key factor for continued growth and mainstream recognition.

Also Read: Coinbase Files Lawsuits Against US States Over Prediction Markets Regulation