The report, titled “U.S. Prediction Markets: How Big, How Fast, What’s Next?”, outlines the potential scale of federally regulated prediction markets and their possible impact on state-regulated sports betting. It also warns that legal conflicts between prediction markets and states may take years to resolve, with disputes potentially extending until 2027 and reaching the U.S. Supreme Court.
“Prediction markets could become an important catalyst for reshaping both the betting and trading industries, and may increasingly blur the line between the two,” the report states, adding that “myriad patches of risks, unknowns and uncertainties are strewn across the path from here to there.”
The platforms have faced resistance from regulators in several states, including consolidated gambling markets such as Nevada. Prediction markets entered Nevada in early 2025 after state regulators identified KalshiEx LLC as offering contracts on sporting events. Kalshi provides yes-or-no contracts on a range of topics, including weather, economic indicators, pop culture, and sports. The Nevada attorney general’s office viewed the sports-related contracts as a form of sports betting.
In late March, Kalshi filed a lawsuit against individual members of the Nevada Gaming Control Board and the Nevada Gaming Commission. The Nevada Resort Association joined the case as a defendant. In November, U.S. District Judge Andrew Gordon dissolved a preliminary injunction that had allowed Kalshi to continue offering sports contracts. Kalshi remains active in Nevada while appealing the ruling to the Ninth Circuit Court, while rivals Robinhood and Crypto.com halted similar offerings in the state.
Legal experts anticipate an expansion of prediction market outlets in 2026. Alan Wilmot, a partner at Heitner Legal PLLC, pointed to rapid growth in designated contract markets, noting that “last year saw 12 organizations submit and/or otherwise become designated as a DCM (designated contract market), a 500 percent increase compared to 2024.” The figure excludes firms seeking futures commission merchant status, according to Wilmot. Some sportsbooks and fantasy sports operators are also evaluating prediction markets as part of their business models.
Nevada regulators have taken a firm stance that prediction market contracts constitute wagering. Mike Dreitzer, chairman of the Nevada Gaming Control Board, warned in an Oct. 15 industry notice that “offerings for sports and other events contracts may be conducted in Nevada only if the offering entity possesses a nonrestricted gaming license with sports pool approval in Nevada and meets the other requirements for sports wagering.”
The report also highlights growing competition between prediction markets and sportsbooks through parlay-style products. More than half of sportsbook gross gaming revenue is generated by parlays, which combine multiple selections into a single wager.
“Any prediction market product that hopes to compete meaningfully in sports must, in some form, replicate the emotional payoff and upside profile that parlays provide,” the report states. Kalshi introduced same-game parlay contracts in September, and analysts expect further innovation, including cross-topic parlays not offered by traditional sportsbooks.
Eilers & Krejcik’s $1 trillion forecast breaks down potential trading volume into $435 billion from sports prediction events, $310 billion from financial and crypto predictions, $160 billion from news-related issues, $40 billion from culture, and $55 billion from other topics.
Despite the projections, the report flags unresolved questions, including whether non-sports events can generate trading volume equal to or greater than sports. “There is no bull case for prediction markets without significant total addressable market contribution from non-sports markets,” it notes. "But for now, we’ll settle on a simpler conclusion: We see a path to non-sports events generating an equal or greater share of the total trading volume generated by sports."
The study also questions whether broader distribution will drive sustained consumer adoption, describing the mainstream U.S. prediction market category as effectively a year old, and whether a regulated online sportsbook operator could fully pivot to prediction markets under regulatory and tax pressures, calling such a shift “a highly speculative but not implausible route driven by multiple factors.”
Dingnews.com 13/01/2026