Predictive Market Trading Hits Record $22.2 Billion Amid NFL Football Craze, Sparking Regulatory Clash Over Sports Betting

[Block Media Reporter Myung Jeong-seon] With the kickoff of the National Football League (NFL) season, predictive market trading has surged, intensifying regulatory conflicts with the existing sports betting industry. Major predictive market platforms like Kalshi and Polymarket have seen betting on sports outcomes become a key driver of market growth, while U.S. state governments and the NFL are demanding stricter regulations, arguing that predictive markets essentially constitute gambling. The related disputes are increasingly likely to lead to a ruling from the Supreme Court.

According to data from blockchain data analysis platform Dune Analytics on the 11th (local time), the trading volume on Kalshi and Polymarket over the weekend reached $8.56 billion. As NFL and NCAA football games concentrated, both companies set daily trading records for two consecutive days. The total weekly trading volume also reached a record high of $22.2 billion.

Predictive markets are platforms where users can trade contracts that allow them to earn profits based on the outcomes of sports events or political and economic events. Previously, major trading targets included decisions by the Federal Reserve on interest rates and election results, but recently, sports-related trading has been leading the market.

Over 80% of Kalshi's Trading Volume Concentrated in Sports... Surge in Combo Betting

Since the start of the NFL regular season, the growth of predictive markets has accelerated. In September, over 80% of Kalshi's total trading volume was related to sports. Following a recent funding round that valued the company at approximately $40 billion, Kalshi is also considering the possibility of an initial public offering (IPO).

The product driving the expansion of sports-related trading is the 'Combo,' which bundles multiple game outcomes into a single contract. Similar in structure to traditional sports betting parlays, multiple predictions must hit simultaneously to earn profits.

Last week, 65% of Kalshi's total trading volume came from Combo products. On the Polymarket U.S. platform, the proportion of Combo trading reached 53%. In Kalshi's case, at least 96% of Combo trading was related to sports.

According to investment bank Piper Sandler, on days when major NFL and college football games are held, the average daily Combo trading volume on Kalshi is approximately $1.36 billion, more than double the volume on days without football games. Considering that the total Combo trading volume for the last NFL regular season was about $900 million, the speed of trading growth is remarkable.

Jordan Bender, an analyst at Citizens Financial Group, commented in an interview with Bloomberg, "The recent growth pattern of predictive markets is not significantly different from the process five years ago when online sports betting applications were spreading."

Sports Betting Companies Enter Predictive Markets... Controversy Over Tax and Regulatory Equity

As predictive markets grow rapidly, competition with existing sports betting companies is intensifying.

In the U.S., traditional sports betting operators are subject to state-specific licenses, taxes, age, and regional restrictions. In contrast, predictive market platforms like Kalshi and Polymarket are classified as federal commodity exchanges and are overseen by the Commodity Futures Trading Commission (CFTC).

This allows them to operate without being subject to some state sports gambling regulations, giving them a competitive edge. In New York, for example, sports betting operators face a tax rate of 51%, while predictive market platforms operating under federal regulatory frameworks do not face the same tax structure.

Ilya Beylin, a law professor at Seton Hall University, explained to Bloomberg, "Predictive market platforms are in a favorable position in regions like Texas and California, where sports gambling is not permitted."

As a result, existing sports betting companies like DraftKings and FanDuel have also launched their own predictive market products in response. However, they currently lag behind Kalshi and Polymarket in terms of trading volume and user acquisition.

Kalshi maintains that its services are different from traditional gambling. Elizabeth Diana, Kalshi's communications head, explained to Bloomberg, "Predictive markets operate as exchanges where users trade contracts, and the platform does not bet directly against customers."

However, concerns about user protection are also growing. An analysis by Bloomberg of trades starting in early 2025 found that the cumulative loss rates for contracts betting on high returns with low probability outcomes were 15% on Kalshi and 27% on Polymarket. Considering platform fees that can reach up to 7%, actual losses could be even higher.

44 States Demand Regulation... NFL Calls for Supreme Court Involvement

The regulatory conflict surrounding predictive markets is escalating into legal disputes.

At least 44 states, including New York, Arizona, and Connecticut, argue that sports-related predictive market contracts fall under illegal gambling subject to state law. In contrast, the CFTC has filed a lawsuit against state efforts to apply gambling-related laws to federally regulated exchanges.

The NFL has also requested the Supreme Court's involvement, asserting that state regulatory authority must be recognized. The NFL is concerned that the CFTC's lax oversight of predictive markets could lead to insider trading and market manipulation, undermining the integrity of games.

Political figures are also raising issues regarding the oversight framework. Democratic Senator Elizabeth Warren and Republican Senator John Curtis have requested oversight-related materials from CFTC Chairman Michael Selig regarding predictive markets and the digital asset industry.

They have raised suspicions that regulatory agencies are overly exposed to the influence of the industries they oversee. Notably, Donald Trump Jr., the son of former President Donald Trump, serves as an advisor to Kalshi, and his venture capital firm has led funding for Polymarket, raising concerns about conflicts of interest.

Currently, with federal appellate courts issuing conflicting rulings regarding predictive market regulations, the likelihood of the Supreme Court stepping in for a final decision is increasing.

If the Supreme Court sides with the states, predictive market platforms may have to comply with state licenses, taxes, and gambling regulations. Conversely, if federal regulatory frameworks are upheld, companies like Kalshi could maintain a legal basis to operate nationwide under CFTC oversight.

John Holden, a business law professor at Indiana University, analyzed that if predictive market companies win in the Supreme Court, it may be difficult to maintain the current sports betting regulatory framework.

Ultimately, this legal dispute is expected to determine who holds regulatory authority over the U.S. sports betting industry, whether it be the federal government or state governments, extending beyond just the operational scope of predictive market platforms. As predictive markets have grown into popular trading platforms alongside the NFL season, future court rulings are likely to impact the competitive landscape and overall business models of the related industry.

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