As of January 16, 2026, the United States prediction market ecosystem has shifted from a speculative niche into a cornerstone of the modern financial landscape. Once defined by the volatility of election cycles, the sector is now witnessing an institutional-grade transformation. According to a landmark analysis by Citizens Financial Group (NYSE: CFG) and a detailed sector report from Eilers & Krejcik Gaming (EKG), the industry is no longer just "growing"—it is on a direct flight path toward exceeding $1 trillion in annual trading activity as it matures into a universal tool for hedging and entertainment.
Current market data shows that the industry's annual trading volume has already surged to an estimated $13 billion to $15 billion in late 2025, representing a staggering tenfold increase from 2024 levels. This "exponential scaling" phase has been ignited by a confluence of regulatory clarity, the entry of major retail brokerages, and a massive shift in consumer behavior that prizes peer-to-peer event contracts over traditional sports betting or static financial derivatives.
The Market: What's Being Predicted
The central "prediction" being tracked by analysts is the timeline for the U.S. ecosystem to hit the $1 trillion mark in annual volume. EKG’s research, titled “U.S. Prediction Markets: How Big, How Fast, What’s Next?”, identifies the end of the decade as the "plausible ceiling" for this milestone. For context, the industry is currently operating at a revenue run-rate of approximately $2 billion annually, a figure Citizens Financial Group (NYSE: CFG) projects will quintuple to over $10 billion by 2030.
The dominant player in this space is currently Kalshi, which has secured a commanding 66% market share as of early 2026. Kalshi’s dominance is largely attributed to its status as a federally regulated exchange under the CFTC and its high-profile integration with Robinhood (NASDAQ: HOOD). This partnership has effectively democratized event trading, allowing millions of retail investors to swap event contracts with the same ease as they trade stocks.
While Kalshi leads on the domestic regulated front, Polymarket remains a titan in the global and on-chain sectors. Despite sitting at second place in total U.S. volume, Polymarket boasts a valuation near $12 billion and continues to dominate the "crypto-native" and international markets. The competition between these platforms has created a liquidity-rich environment, where weekly volumes on Kalshi alone have recently topped $2 billion.
The resolution criteria for this "trillion-dollar" forecast depend on three main factors: continued federal regulatory support, the successful integration of sports event contracts into peer-to-peer formats, and the expansion of prediction markets into corporate finance and M&A hedging.
Why Traders Are Betting
The massive capital flows into prediction markets are no longer just "political betting." EKG’s analysis reveals that Sports has become the primary engine of the market, projected to account for 44% (~$435 billion) of the eventual trillion-dollar volume. Traders are fleeing traditional sportsbooks—operated by the likes of DraftKings (NASDAQ: DKNG) and Flutter Entertainment (NYSE: FLUT), the parent of FanDuel—in favor of prediction markets because event contracts offer superior odds and lower "juice" (the vigorish) by allowing users to bet against each other rather than a house.
Finance and macroeconomics have emerged as the second-largest pillar, accounting for 31% (~$310 billion) of projected volume. In early 2026, it is common practice for hedge funds and retail traders to use Kalshi or Polymarket to hedge against CPI prints, Federal Reserve rate decisions, and even the daily flows of Bitcoin ETFs. These "macro-mini" contracts provide a more precise tool for hedging specific news risks than traditional equity options.
The "financialization of everything" is the primary driver here. As Robinhood (NASDAQ: HOOD) recently reported, event contracts have become their fastest-scaling product line in history, now accounting for 10% of the firm's total revenue. Traders are betting on prediction markets because they provide a "truth machine" that aggregates information more efficiently than traditional media or polling, offering a clear, real-time probability for any event.
Broader Context and Implications
This shift represents a fundamental "blurring of the lines" between gambling, finance, and social media. The rise of prediction markets has forced a re-evaluation of how the public consumes information. In 2025, during several high-stakes geopolitical events, prediction market odds were cited more frequently by news outlets than traditional expert commentary, as the "money on the line" was viewed as a more reliable indicator of reality.
However, this growth has not been without friction. While the CFTC has largely accepted event contracts at the federal level, a "regulatory split" has emerged. In early 2026, states like Connecticut and Nevada issued cease-and-desist orders against platforms offering sports-based event contracts, arguing they constitute unlicensed gambling. This jurisdictional battle is the most significant hurdle on the road to the $1 trillion milestone.
The broader implication is the birth of an "Information Economy" where news is not just consumed, but traded. The historical accuracy of these markets—which outperformed traditional polls by a wide margin in the 2024 and 2025 cycles—has given them a level of institutional credibility that was unthinkable five years ago. This has led companies to explore internal prediction markets for forecasting project deadlines and supply chain disruptions.
What to Watch Next
The most critical milestone to watch in the coming months is the outcome of the state-level legal challenges. If Kalshi and Robinhood (NASDAQ: HOOD) can successfully argue that their contracts are financial instruments rather than gambling products in state courts, it will clear the way for a massive influx of liquidity from states that have previously banned online sports betting.
Additionally, the expansion of "Combos"—peer-to-peer parlay products—is expected to be a major volume driver throughout 2026. Watch for traditional sportsbooks like DraftKings (NASDAQ: DKNG) to respond; many analysts expect the legacy operators to launch their own exchange-style products by the end of the year to combat the drain on their user bases.
Finally, keep an eye on institutional adoption. As more Fortune 500 companies begin using event contracts to hedge against specific regulatory or weather-related risks, the "Finance & Crypto" segment of the market could grow even faster than EKG’s current projections.
Bottom Line
The transition of prediction markets from a fringe curiosity to a trillion-dollar ecosystem is the defining financial story of the mid-2020s. The EKG and Citizens Financial reports underscore a reality that is already visible on the screens of millions of traders: the world is increasingly viewing "events" as an asset class.
Whether it is a Fed rate hike, the outcome of the Super Bowl, or the success of a blockbuster movie, the ability to trade these outcomes in a transparent, peer-to-peer environment is a revolutionary shift. While regulatory hurdles at the state level remain a significant variable, the momentum behind the "truth machine" suggests that the $1 trillion annual volume mark is not a matter of if, but when.
PredictStreet focuses on covering the latest developments in prediction markets. Visit the PredictStreet website at https://www.predictstreet.ai/.
This article is for informational purposes only and does not constitute financial or betting advice. Prediction market participation may be subject to legal restrictions in your jurisdiction.
