Prediction markets could grow into a $1 trillion industry in the United States, according to a new report from Eilers & Krejcik Gaming, despite mounting regulatory pressure from state authorities.
A report by California-based research and consulting firm Eilers & Krejcik Gaming, as reported by several media outlets, suggests that prediction markets have the potential to significantly reshape both the betting and financial trading industries, even as legal scrutiny around such products intensifies across multiple US states.
The report, titled “U.S. Prediction Markets: How Big, How Fast, What’s Next?”, argues that prediction markets could emerge as a powerful catalyst for convergence between traditional sports betting and financial-style trading products. However, it also cautions that the sector faces considerable risks, regulatory uncertainty, and unresolved market questions. Analysts say the sector’s expansion could depend heavily on evolving US prediction market laws, particularly as regulators continue reviewing event-based contracts.
Sports and financial contracts drive growth forecast
According to Eilers & Krejcik’s projections, as reported by Gambling News, sports-related prediction events would represent the largest segment of the market, accounting for approximately $435 billion in trading volume.
An additional $310 billion is expected to come from financial and cryptocurrency-related forecasts, with contracts for news and political events potentially contributing about $160 billion. About $40 billion is anticipated to come from cultural events, with an extra $55 billion coming from other specialised markets.
According to the paper, prediction markets are increasingly providing contract formats that are similar to sportsbook parlay bets, which combine several outcomes into a single wager. Similar to parlays, these products are riskier but have the potential to yield bigger payouts, which attracts both speculative traders and bettors. Federally regulated prediction exchange Kalshi, ahead of the NFL season last year, rolled out parlay-style event contracts that allowed users to trade on multiple outcomes at once.
Prediction markets blur betting and trading lines
Eilers & Krejcik noted that the growing use of multi-outcome contracts is blurring the traditional distinction between gambling and financial trading, creating hybrid products that appeal to a broader audience. Industry analysts increasingly view prediction markets for economic forecasting as a potential growth segment tied to inflation, elections, and policy events. This convergence could allow prediction markets to compete directly with sportsbooks while also drawing interest from retail traders.
However, the firm warned that the long-term viability of the sector depends heavily on non-sports contracts making a meaningful contribution to the overall addressable market.
“There is no compelling case for prediction markets without a significant contribution to the total addressable market from non-sports categories,” the report stated, adding that further research may be required to fully assess that opportunity.
Regulatory pressure and legal uncertainty persist
Despite the optimistic revenue outlook, regulatory challenges remain a major obstacle. Eilers & Krejcik questioned whether online sportsbook operators might eventually pivot toward prediction market models, citing potentially lower costs of revenue and the opportunity to offer differentiated products.
Several factors could influence that shift, including high state gaming tax rates, unclear gambling regulations, and the possibility of a more permissive Commodity Futures Trading Commission (CFTC) under the current Trump administration. Industry observers have also pointed to evolving CFTC regulation of prediction markets as a major factor that could shape future growth and operator expansion in the sector.
At the same time, the report noted that state regulators may continue to push back aggressively. Multiple legal disputes are ongoing between prediction market platforms and regulators across the US.
Enforcement intensifies
Most recently, Tennessee authorities intensified enforcement actions against sports-related prediction markets such as Kalshi and Polymarket, accusing the platforms of offering wagering products without obtaining the necessary licences.
Prediction markets have come under increased and renewed regulatory attention following revelations that a recently established Polymarket account made substantial wagers on Maduro’s overthrow just prior to the US operation. The controversy has reignited concerns over insider trading on prediction platforms.
Amid this, US Representative Ritchie Torres, a Democrat from New York, has announced plans to introduce the Public Integrity in Financial Prediction Markets Act of 2026. The proposed legislation would prohibit members of Congress, political appointees, and executive branch employees from trading prediction market contracts tied to political outcomes or government action if they have access to non-public information.
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