TLDR
- Prediction markets recorded more than $82 billion in trading volume in September, according to Stifel.
- Regulated prediction market volume reached $76.7 billion, up 64% from August.
- On a handle-like measure, prediction markets grew 27% compared with 43% for regulated sportsbook handle.
- Kalshi’s share of regulated prediction market volume fell to 79% from 86% in August.
- Stifel warns that higher prediction market spending by DraftKings and Fanatics could weigh on near-term earnings.
Prediction markets recorded more than $82 billion in trading volume in September, according to research from investment firm Stifel. But growth lagged traditional sportsbooks when measured on a more comparable basis.
Of the total, $76.7 billion came from federally regulated prediction markets. That figure was up 64% from August.
Stifel also used a measure that more closely resembles sportsbook handle. On that basis, prediction market trading grew 27% month over month, while regulated sports betting handle rose 43% in states that have reported so far.
The firm said the slower growth could point to early market saturation and customer turnover. This comes even as Kalshi and Polymarket spend heavily on user growth and product upgrades.
Sports and Parlays Drive Prediction Market Volume
Sports remained the largest category of prediction market trading in September. Single-event sports contracts generated $22.8 billion, up 23% from August.
Combination contracts, known as parlays, more than doubled to $41.6 billion. Sports and parlays together made up 83% of Kalshi’s trading volume.
Reported volume can overstate actual betting activity, especially in parlay markets. Contracts bought for pennies can count as $1 in reported volume, which makes comparisons with sportsbook handle harder.
Stifel estimated taker-only volume across CFTC-regulated exchanges at $17.7 billion. The estimate was based on trading patterns at Kalshi and Polymarket US, though it can still count trades made when users exit positions.
Kalshi’s share of regulated prediction market volume dropped to 79% from 86% in August as rival platforms gained ground.
Sportsbooks Show Signs of Growth
Traditional sports betting is showing renewed growth. U.S. sports betting handle rose an estimated 4% year over year in September across 13 reporting states, despite one fewer week of NFL games than last year.
Gross gaming revenue fell 9% because game results mostly favored bettors. FanDuel continued to gain handle share, while DraftKings improved its online casino market share, Stifel said.
The firm kept its positive long-term view on sportsbook operators. However, it warned that higher spending on prediction markets could hurt near-term earnings.
DraftKings could move some of its planned prediction market spending into 2026. Fanatics has said it could nearly triple its marketing spending next year.
Reported trading volume has also come under scrutiny. The Wall Street Journal reported Saturday that $108 million of $167 million in transactions on ADI Predictstreet, FIFA’s World Cup prediction market partner, came from linked cryptocurrency accounts apparently tied to the platform.
Stifel noted that several exchanges, including Kalshi and DraftKings’ DKeX, have recently cut back trading incentives as liquidity improves. The firm sees this as a sign that exchanges are drawing enough activity without paying market makers as much.
Major sportsbook operators are set to report third-quarter earnings in the coming weeks. Investors will be watching for details on how prediction market competition and higher spending are affecting growth and profits.
