Prediction Markets Yearly Revenue to Reach $10B by 2030, Citizens Says

According to a new report by Citizens Financial Group, an American bank holding company, prediction markets revenue could reach more than $10 billion in annual revenue by 2030, as institutional capital enters the scene.

Citizens Says Prediction Markets Will See Significant Growth

Devin Ryan, managing director at Citizens, observed that prediction markets appear poised to become a durable and high-growth component of global capital markets and financial architecture. He noted that their economic significance is rooted in the same principle that has driven the growth of options and derivatives over the past 50 years: when investors can express views more precisely, markets become more efficient.

According to the report, prediction markets address a longstanding inefficiency by enabling investors to express opinions on specific events without the cross-factor basis risk inherent in traditional hedging instruments. The analysts suggested that binary contracts linked to economic indicators, regulatory decisions, or merger outcomes could offer more precise hedges than sector ETFs or index options.

Event-driven hedge funds could isolate deal, litigation, and regulatory outcomes without taking on beta or duration exposure, while macro funds could hedge inflation data and policy decisions directly. Quantitative firms could incorporate probability curves as high-signal inputs into their models. The report suggested that, by reducing basis risk, these contracts would likely expand overall hedging capacity rather than cannibalize existing derivatives markets.

However, Obstacles Still Remain 

Regulatory uncertainty remains the primary constraint, especially concerning jurisdictional tensions between US federal and state authorities over sports-linked markets. Several states have proposed strong anti-prediction markets policies, and some have even banned them altogether. Just last week, for example, Suffolk County Superior Court Judge Christopher Barry-Smith questioned whether prediction market platforms should be allowed to operate in the state, making him one more high-profile government voice standing in the way of the expansion of companies like Kalshi.

Citizens cited Liquidity fragmentation, insider information concerns, and outcome ambiguity as more near-term obstacles in the growth of prediction markets. The report compared prediction markets to earlier financial innovations such as listed options, ETFs, and credit default swaps. All of this initially faced skepticism before becoming integral to market structure. The analysts indicated that prediction markets appear to be following a similar trajectory, starting with retail participation and eventually progressing to market maker involvement, regulatory formalization, and full institutional integration.

Despite all these challenges, Citizens’ report says that prediction markets will eventually transition from primarily a speculative curiosity to a mainstream financial tool, as digital asset exchanges and traditional financial institutions continue to invest in this scene.