Prediction Market to Hit $10 Trillion

Introduction to Prediction Markets

Prediction markets are platforms that allow users to trade contracts on the outcome of various events, such as sports games, elections, and financial market movements. These markets have gained popularity in recent years, with the global prediction market expected to reach $10 trillion in trading volume annually by 2035, according to a forecast by Bernstein.

Prediction Market Growth

Bernstein has revised its prediction market forecast, predicting that the industry will handle $10 trillion in trading volume annually by 2035. This is a significant increase from its previous forecast of $1 trillion by 2030. The growth is expected to be driven by financial asset contracts, including crypto, stocks, and commodities, which are set to overtake sports as the largest category.

According to Bernstein's analysts, led by Gautam Chhugani, the industry's trading volume is expected to compound at roughly 70% a year through 2035. This growth is driven by the increasing popularity of financial asset contracts, which are set to grow from 12% of the market in 2025 to 49% by 2035.

Financial Asset Contracts

Financial asset contracts, including crypto, stocks, and commodities, are set to become the largest category in the prediction market. This is driven by the growth of new products such as KPI markets, which allow users to trade a single corporate metric, such as production, deliveries, or subscriber growth, rather than the stock price itself.

Perpetual futures, which are contracts with no expiration date, are also expanding from crypto to commodities and single stock perps. This allows traders to hold a position indefinitely, rather than having it close out on a set day.

Sports Betting

Sports betting, which currently makes up 61% of the prediction market, is expected to fall to 38% by 2035. This is driven by the growth of financial asset contracts, which are set to become the largest category in the market.

• Crypto's share of Kalshi's volume jumped from under 5% in January to about 20% in August.
• Commodity trading on the platform grew from less than $2 million in all of 2025 to roughly $590 million so far in 2026.
• Kalshi now controls about 60% of industry volume, up from 35% a year ago.

Regulatory Clarity

Bernstein estimates that full U.S. regulatory clarity for sports prediction markets is unlikely before 2027 or 2028. This is due to conflicting court rulings over whether these contracts count as federally regulated derivatives or state-regulated gambling.

Until regulatory clarity is achieved, the industry is expected to continue growing, driven by the popularity of financial asset contracts and crypto trading. Robinhood CEO Vlad Tenev is already positioning for this shift, stating that sports will become a minority in the prediction market within a few years.

Bernstein estimates that crypto, stocks, and commodities alone represent a $700 trillion pool of possible bets today, growing to $900 trillion by 2035. Even if prediction markets capture just 0.5% of that pool, it works out to $4.7 trillion a year in volume on financial contracts alone, without counting a single sports wager.

Implications for India

The growth of the prediction market is expected to have significant implications for India, where the market is still in its nascent stages. As the global prediction market continues to grow, Indian companies and investors are likely to take notice and explore opportunities in this space.

However, the lack of regulatory clarity in the U.S. is likely to have a ripple effect on the Indian market, with regulators and companies waiting for clearer guidelines before making significant investments.

Expert Perspective

According to experts, the growth of the prediction market is driven by the increasing demand for alternative investment opportunities and the rise of decentralized finance (DeFi). The prediction market is expected to play a significant role in the growth of DeFi, as it provides a platform for users to trade contracts on the outcome of various events.

Timeline

The prediction market has experienced significant growth in recent years, with the industry's trading volume expected to compound at roughly 70% a year through 2035. Here is a brief timeline of the prediction market's growth:

• 2025: The prediction market's trading volume was approximately $50 billion.
• 2026: The prediction market's trading volume is expected to reach $410 billion.
• 2030: Bernstein previously forecasted the prediction market to reach $1 trillion in trading volume.
• 2035: Bernstein now forecasts the prediction market to reach $10 trillion in trading volume.

What to Watch Next

As the prediction market continues to grow, there are several key trends to watch out for. These include the increasing popularity of financial asset contracts, the growth of crypto trading, and the potential for regulatory clarity in the U.S.

Additionally, the Indian market is likely to be an important area of focus, as companies and investors look to capitalize on the growing demand for prediction market products.

The growth of the prediction market is expected to have significant implications for the financial industry as a whole, with the potential for new investment opportunities and the rise of decentralized finance (DeFi). As the market continues to evolve, it will be interesting to see how regulators and companies respond to the growing demand for prediction market products.