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Investing.com -- Clearer regulatory rules are transforming prediction markets from rigid, exchange-run contracts into flexible platforms powered by crypto and blockchain, according to Bernstein analysts. At the center of that shift, Polymarket and Kalshi are fighting for dominance.
Kalshi built its business on a regulation-first model, securing key licenses from the CFTC and even winning a federal court battle over political contracts.
As a centralized U.S.-based exchange, it offers binary event contracts across politics, economics, weather, and sports, requiring full KYC and AML compliance.
On the other hand, Polymarket began as a decentralized platform built on Polygon and Ethereum, growing into the largest global prediction venue with peak volumes of $2.6 billion in November 2024.
Long barred from the U.S. after a CFTC action, it is now preparing a regulated return by relaunching through a licensed exchange, QCEX, with KYC-compliant access.
“By acquiring a licensed derivatives exchange - QCEX, [Polymarket] gained a pathway to U.S. markets,” Bernstein analyst Gautam Chhugani said in a note.
Kalshi, meanwhile, is moving the other way—announcing partnerships with Solana and Base to integrate blockchain and expand into non-U.S. markets, while strengthening its distribution through crypto ecosystems.
Trading volumes underline the intensity of the rivalry. As of September, Kalshi’s monthly volumes have topped $1.3 billion, nearly double Polymarket’s $700 million.
Both together have already executed $12 billion in trades in 2025, with activity expanding beyond political bets into sports, cultural events, and corporate outcomes.
“Strong regulatory clarity is paving the way for evolution of existing markets to an all-encompassing prediction market,” Chuggani said.
Partnerships are also fueling growth. Polymarket has been named the official prediction partner of X, integrating its markets directly into the social media platform. Kalshi is working with xAI to embed Grok’s AI-driven odds analysis.
Robinhood and Coinbase are also leaning in—Robinhood partnered with Kalshi for a full prediction hub, clocking $1 billion in Q2 volumes, while Coinbase announced plans to add prediction markets as part of its “everything exchange” vision.
For users, the convergence of crypto, AI, and social media is reshaping how information is consumed and acted upon.
Prediction markets are not only providing alternative signals to traditional news and polling but also offering liquidity for highly specific contracts, such as those on Nvidia’s data center revenues or the Federal Reserve’s monetary policy decisions.