Prediction market volumes are projected to reach $1 trillion by 2030 as institutional investors move beyond sports betting to hedge political and economic risks, according to a Tuesday note from Bernstein analysts reported by decrypt.co.
While sports betting currently dominates platforms like Polymarket and Kalshi, analysts expect this share to drop. Today, sports-related event contracts account for 62% of total trading volumes, but that figure should moderate to 31% by 2030.
Institutional players are expected to drive this shift by using markets to manage exposure to policy changes and business developments.
“We expect an institutional market to develop around economics, business, and political contracts, as investors seek more direct and discrete exposure to events,” the Bernstein analysts wrote.
From hobbyists to high finance
Corporations and insurance firms will likely adopt these markets to hedge specific risks. Unlike traditional derivatives like credit default swaps, which provide only indirect exposure, event contracts eliminate the risk of a policy outcome not matching a hedging instrument's performance.
Bernstein also noted that these markets broaden access to financial instruments previously restricted to a small group of professionals.
Revenue growth is expected to be massive. Analysts foresee prediction markets generating roughly $10.8 billion by 2030, a jump from the $500 million projected for 2025.
Currently, sports remains the primary driver for individual traders. A Dune dashboard shows sports accounts for 42% of Polymarket’s volume and 78% of Kalshi’s. Kalshi recently set a record with $2.7 billion in sports wagers during the Masters Tournament.
Major financial players are already entering the space. Tradeweb, which handles $2.8 trillion in daily trading volume, recently partnered with Kalshi, while Intercontinental Exchange (ICE) invested $1.6 billion in Polymarket to assist with distribution.
High-frequency trading firms are also taking positions. Jump Trading has secured small stakes in both Polymarket and Kalshi in exchange for providing liquidity. Meanwhile, Susquehanna International Group has begun using arbitrage and mispricing detection techniques on these platforms.
Bernstein analysts suggested the entry of these firms signals that prediction markets are moving away from their origins as a playground for internet hobbyists and into the professional sphere of high finance.