Prediction Markets Set for $1.1T Sports Betting Opportunity in US

A new report from Bank of America suggests that prediction market platforms could tap into a massive opportunity in the United States, with sports-related event contracts reaching $1.1 trillion in annual trading volume over time.

Kalshi Dominance Fuels Surge in US Prediction Market Growth

The estimate reflects the broader potential of the market rather than immediate expectations. Analysts believe that total contract activity in 2026 will be closer to $100 billion, which highlights the significant growth still ahead, as reported by Bloomberg. Even so, the long-term outlook points to a segment that expands and begins to rival traditional sports betting.

According to the report, if platforms collect fees averaging around 1%, the projected volume could translate into $10 billion in yearly revenue. That figure puts prediction markets on par with some of the largest online sportsbooks, underlining their growing impact within the gambling ecosystem.

A major driver of this momentum is the rise of platforms like Kalshi, which dominates the US prediction-market space. The exchange is estimated to account for about 90% of domestic activity, with sports-related contracts making up four-fifths of its trading volume in recent months. Competitors remain far behind, with a small share of the market.

Unlike traditional sportsbooks, prediction platforms work more like financial exchanges. User demand determines prices rather than fixed odds, and participants can trade positions. This structure appeals to experienced bettors who may face restrictions or limits on conventional betting sites.

Regulation Gap Helps Prediction Platforms Expand Nationwide

Another key advantage lies in regulation. Prediction markets fall under federal oversight, which allows them to offer contracts nationwide. In contrast, sports betting is regulated at the state level and remains unavailable in several large markets. This broader accessibility gives prediction platforms a significant edge in reaching new users.

The report also highlights demographic factors. Many prediction platforms allow participation from users aged 18 and above, expanding their potential audience compared to sportsbooks, which require customers to be at least 21. Analysts note that younger users play a key role in driving industry revenues.

Cost structure is another differentiator. Prediction-market operators are not subject to the same state-level gaming taxes that apply to sportsbooks, which can consume a significant portion of revenue. This allows them to operate with lower overhead and offer more competitive pricing. Despite the strong growth outlook, the sector faces ongoing legal challenges. Several states have attempted to restrict prediction markets, arguing that they resemble unlicensed gambling. At the same time, federal regulators continue to assert their authority over the space, setting the stage for further legal battles.