In less than a decade, the U.S. has gone from a patchwork of prohibitions to a fully fledged betting economy that includes sportsbooks and online casinos. In 2024, U.S. commercial gaming revenue hit a record $71.9 billion, the fourth straight record year, with sports betting alone generating $13.7 billion in gross gaming revenue.
Alongside this boom, another ecosystem has quietly taken shape: forecast exchanges like Kalshi and Polymarket, plus a new wave of new prediction apps backed by Wall Street infrastructure and big-name sportsbooks. These platforms let users trade “Yes/No” contracts on sports, politics, and economic events, behaving more like a financial exchange than a traditional book.
With FanDuel preparing its own CFTC-regulated prediction app and the NYSE’s parent company committing up to $2 billion to Polymarket, the line between betting and markets is starting to blur in a meaningful way.
The Benchmark: How Big Is Traditional Sports Betting?
To understand whether forecast exchanges can change sports betting, you need to see what they’re up against.
According to the American Gaming Association’s Commercial Gaming Revenue Tracker, U.S. commercial gaming revenue reached $71.9–71.92 billion in 2024, up 7.5% year-on-year.
Within that:
- Sports betting GGR: $13.7 billion in 2024, up 25.4% from 2023.
- The AGA notes four consecutive years of record commercial gaming revenue, with tribal gaming expected to lift total U.S. gaming to roughly $115 billion once fully reported.
By any measure, regulated sportsbooks are now a mature, high-revenue business. Forecast exchanges are not yet in the same weight class—but their growth curves look very different.
Forecast Exchanges by the Numbers
Polymarket: From Niche to Billions
Polymarket, the crypto-based prediction platform, has gone from curiosity to scale in a single election cycle:
- $9+ billion cumulative trading volume in 2024, with a monthly all-time high of $2.6–2.63 billion in November.
- Monthly volume climbed from just $54 million in January 2024 to over $2.6 billion in November—a nearly 48× increase in less than a year.
- Active traders peaked around 314,500 in December 2024, with open interest hitting roughly $510 million during the U.S. election period.
Polymarket has continued to post billion-dollar months into 2025, with one report noting $1.16 billion in volume in June 2025 despite a smaller active user base—suggesting larger, more committed trades per user.
The crucial signal for the broader industry is institutional: Intercontinental Exchange (ICE), the parent of the New York Stock Exchange, has announced plans to invest up to $2 billion in Polymarket at a valuation of roughly $8–9 billion, and will distribute its event-driven data to institutional clients.
Kalshi: Regulated, Sports-Heavy, and Growing Faster
Kalshi, by contrast, is a CFTC-regulated U.S. exchange for event contracts. It has leaned aggressively into sports and macro events:
- Trading volume surged to about $1.97 billion in 2024, up from $183 million the year before—a more than 10× jump.
- By H1 2025, Kalshi had processed roughly $2 billion in sports trading volume, with sports accounting for around 75% of overall activity.
- In 2025, Kalshi has set new records with over $1 billion traded in a single week and is projecting $50 billion in annualized trading volume, claiming more than 60% of global prediction-market share.
A Reuters analysis of the 2024 U.S. election noted that prediction markets like Polymarket and Kalshi together handled billions in election-related volume, with Polymarket alone seeing about $3.1 billion on election bets and Kalshi around $197 million, Reuters reported.
In September 2025, prediction platforms also saw over $300 million wagered on a single Federal Reserve interest-rate decision, with roughly $208 million traded on Polymarket and $91 million on Kalshi, plus tens of millions of contracts on Robinhood’s event markets.
These numbers remain small compared to sports betting handle, but the growth rates—and the institutional money behind them—point to a structural shift rather than a passing fad.
Why FanDuel’s Forecast App Matters
The clearest sign that forecast exchanges are no longer marginal is that FanDuel is building one.
In a joint announcement with CME Group, FanDuel confirmed it will launch FanDuel Predicts, a standalone prediction-markets app, in December (subject to CFTC and exchange approvals).
Key design choices matter:
- Sports event contracts—covering MLB, NBA, NFL, NHL and more—will be listed on CME exchanges and accessed through the FanDuel Predicts interface.(investor.cmegroup.com)
- The app is targeted at states where online sports betting is not yet legal, such as California, Texas, and Georgia. In those states, users will be able to trade event contracts regulated at the federal level, while sportsbooks remain unavailable.
- As states legalize online sports betting, FanDuel plans to switch off sports event contracts in those jurisdictions, effectively running two parallel models: state-licensed sportsbooks where allowed, and CFTC-regulated event markets where they are not.
This is not a side project. FanDuel’s parent company Flutter has already warned investors that ramping up a prediction-market strategy will hit short-term profit forecasts, signaling a genuine capital commitment to the model.
In parallel, Wall Street commentary now openly frames Polymarket and Kalshi as emerging competitors to DraftKings and FanDuel, with short sellers arguing that prediction markets—with tighter pricing and broader access—pose a credible long-term threat to the duopoly.
Mechanics: House vs. Exchange
Sportsbooks: Margin, Liability, and State Lines
Traditional sportsbooks are house-driven:
- The operator sets lines and adjusts them to balance liability.
- A house margin is built into every price—overround on a moneyline, hold on a parlay.
- Every state has its own licensing regime, tax rate, allowable markets, and compliance rules.
In practice, that means a bettor’s experience can vary wildly from Colorado to New York: different promos, different markets, different tax treatment, and in some places no legal sportsbook at all.
Forecast Exchanges: Market-Driven Prices
Forecast exchanges operate on a trading model:
- Users buy and sell “Yes/No” contracts; prices typically range from $0.01 to $0.99, mapping directly to implied probabilities.
- Kalshi functions as a matching engine, while fees are charged on trades or settlement rather than hidden in the odds.
- You can enter, scale, or exit positions before settlement, more like trading a stock or option than placing a one-way bet.
For sports fans, this can feel familiar—live betting already mimics price movement—but the exchange model is more transparent. You see the bid/ask, the depth of the book, and how quickly prices react to news, injuries, or line-up changes.
Why Forecast Exchanges Appeal to Sports Bettors
National Access and a Single Rulebook
FanDuel Predicts and Kalshi both rely on federal oversight (CFTC) rather than 50 separate state regulators. Event contracts are listed on regulated exchanges, and access is mediated through brokers or apps.
If this model scales, a user in California could have the same interface, contract definitions, and rules as a user in New Jersey, even though one can’t legally place a traditional online sports bet. That consistency is a sharp contrast to the fractured sportsbook landscape.
Pricing That Reflects the Crowd
Because prices are market-driven, they tend to:
- Incorporate new information rapidly (injuries, weather, roster changes, news alerts).
- Reflect collective expectations rather than a bookmaker’s risk management priorities.
During the 2024 election and subsequent Fed decisions, prediction markets minted real-time probability curves that often moved ahead of pundit narratives, with hundreds of millions of dollars in volume tied to single events.
For a bettor used to static pre-match lines and book margins, this feels like a more direct expression of probability.
Trading vs. Locking In
On a sportsbook, you lock in a bet and hope. Cash-out features exist, but they’re controlled and priced by the book.
On a forecast exchange, every moment before settlement is tradable:
- You can buy “Yes” early, sell later if the price moves in your favor.
- You can hedge mid-game, flipping into “No” or reducing exposure.
- You can treat a contract as a short-term opinion, not a full-game commitment.
That flexibility is part of why sports already account for roughly three-quarters of Kalshi’s trading activity and why FanDuel is willing to build a dedicated prediction app rather than just adding a novelty tab inside its sportsbook.
Regulatory Turning Points
Prediction markets have existed for decades, but until recently, U.S. regulators were more inclined to shut them down than to scale them.
That tone has shifted:
- In September 2024, a federal district court ruled that Kalshi could list election-related contracts after the CFTC tried to block them.
- In 2025, the CFTC dropped its appeal, effectively ending the legal fight and confirming Kalshi’s ability to operate under a regulated framework.
- At the same time, the CFTC and CME are formally reviewing and structuring sports event contracts as a category of event-based derivatives, rather than treating them purely as gambling products.
Not everyone agrees with this direction. The American Gaming Association has argued that many prediction-market products are substantively similar to sports bets and should be regulated as gambling, with equivalent consumer protections and restrictions.(Investopedia)
That debate is far from over—but the result so far is clear: instead of being shut out, forecast exchanges are increasingly invited into the regulatory tent, especially when they partner with established market infrastructure such as CME and ICE.
Limits, Frictions, and Open Questions
For all the hype, forecast exchanges still face real constraints.
Scale Gap
Even with $9+ billion in annual volume for Polymarket and tens of billions in projected annualized volume for Kalshi, prediction markets are still a fraction of the roughly $13.7 billion in annual sports betting revenue and the much larger handle behind it.
Forecast exchanges are growing fast, but they’re still challengers, not replacements.
Legal and Tax Ambiguity
Event contracts occupy a hybrid legal space:
- Some regulators treat them as derivatives; others see them as functionally equivalent to wagering.
- Tax treatment can differ from classic “gambling income,” but guidance is incomplete and evolving; users may face differing reporting rules and deduction limits depending on jurisdiction and structure.
For users, this means the regulatory and tax advantages that advocates tout are real but not guaranteed, and likely to change as legislators and agencies respond to growth.
Consumer Protections
State-licensed sportsbooks must meet relatively mature standards: age checks, self-exclusion, clear responsible-gambling tools, and strong audit frameworks.
CFTC-regulated exchanges and offshore crypto platforms have different rulebooks, often written for financial markets rather than for recreational gamblers. Critics—including the AGA and some policymakers—worry that consumers may not get an equivalent layer of protections, especially around problem gambling and marketing conduct.
What Changes If Forecast Exchanges Keep Growing?
If the current trajectories hold—FanDuel Predicts launches on time, ICE’s Polymarket investment closes, Kalshi scales sports trading into the tens of billions—several shifts seem likely:
- Pricing pressure on sportsbooks
When users can see liquid, transparent “probability prices” on exchanges, static sportsbook odds with heavy margins may look less appealing, especially to sharper or more price-sensitive players. - A second regulatory lane for sports speculation
Instead of a pure state-by-state sportsbook model, the U.S. could end up with two coexisting systems:- state-licensed sportsbooks
- federally supervised event-contract markets
- More sophisticated sports bettors
Forecast exchanges nudge users toward thinking in probabilities, implied edges, and position-sizing—concepts closer to trading than to recreational betting. - Convergence with finance
With ICE distributing Polymarket’s event data and CME listing FanDuel contracts, event odds start to look like a new class of financial signal—somewhere between a betting line and a market-implied forecast.(ir.theice.com)
From a bettor’s perspective, the difference is intuitive: you are still speculating on uncertain outcomes, but the infrastructure, pricing, and regulatory treatment are shifting underneath.
From Betting to Trading
Forecast exchanges are not about replacing sports betting; they are about re-wiring how it works.
The numbers are still modest next to U.S. sportsbooks, but growth is rapid: Polymarket going from $54 million to $2.6 billion in monthly volume in under a year, Kalshi projecting $50 billion in annualized trading volume, FanDuel preparing a CFTC-regulated prediction app with CME, and the NYSE’s parent company committing up to $2 billion to the sector.
For users, the pitch is simple: market-driven prices, a trading-style experience, and potentially a single rulebook that works across states. For regulators and incumbents, the questions are more complex: how to classify these products, how to protect consumers, and how to manage the overlap with gambling law.
But whether you view them as exchanges or just a more sophisticated way to bet, the direction of travel is clear: forecast markets are moving from the periphery into the core of how people speculate on sports and real-world events.
